The Turkish central bank implemented on Thursday a further interest rate hike of 250 basis points in line with economists’ expectations, raising its benchmark one-week rate to 45% and completing a dramatic cycle of rate hikes initiated last year, when new governor Hafize Gaye Erkan took office in June appointed by Erdoğan, and made a sharp turnaround in Turkey’s previous monetary policy of rate cuts despite out-of-control inflation.
At this year’s first meeting of its Monetary Policy Committee, the Turkish central bank stressed that “the tight monetary policy necessary to set a disinflationary course has been reached, and this level will be maintained as long as necessary”. “The current level of interest rates will be maintained until there is a significant reduction in the trend of underlying monthly inflation, and until inflation forecasts are in line with projected values,” it added.
This is, in fact, the 8th interest rate hike since Erdoğan designed Erkan as head of the Turkish Central Bank, being the first woman in Turkey’s history to be named for this post.
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Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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