Turkey’s central bank delivered a large interest rate hike on Thursday by raising its key rate by 6.5 percentage points, boosting it to 15 percent. The increase is a significant jump from the current 8.5 percent and is the first since March 2021.
The jump comes after Erdogan appointed two internationally respected officials to head the bank and the finance ministry.
The rate hike is an indication that the country is moving away from Erdogan’s unorthodox belief that lowering interest rates fights inflation.
Inflation is almost 40% and Turks are in the grip of a cost-of-living crisis.
Erdogan – a self-declared “enemy” of high borrowing costs – has said he would “accept” his new finance minister’s policies but also insisted that his views have not changed.
That has led to questions about whether Turkey’s central bank could act independently.
“We will take decisive steps in the fight against inflation,” Erdogan said Wednesday. “We will increase our efforts to protect large sections of our people from the effects of inflation.”
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