The Turkish Central Bank raised the key rate to 35%

The Turkish Central Bank again raised its key rate by 500 basis points, bringing the rate to 35%, reported press service of the regulator. This is the fifth increase in a row since the end of June.

“The (Monetary Policy Committee of the Central Bank) decided to continue the process of tightening monetary policy in order to set a course towards deflation as soon as possible, stabilize inflation expectations and control the deterioration in price dynamics,” the press release said following the meeting.

Inflation in the third quarter exceeded expectations, the Central Bank noted. This was facilitated by high domestic demand, steady growth in prices in the services sector and worsening inflation expectations of the population. The regulator also notes a downward trend in monthly inflation, but warns of risks due to oil prices caused by “geopolitical events.”

In early June, after being re-elected, President Recep Tayyip Erdogan appointed a new head of the Central Bank, 44-year-old Hafize Gaye Ercan. International experts welcomed the decision, as Erkan is considered a supporter of traditional PrEP.

At the end of the same month, the Turkish Central Bank began a cycle of monetary tightening (MCT), increasing the rate from 8.5 to 15% for the first time since March 2021. In July, the Turkish regulator raised the rate by 250 bps. p. – up to 17.5%. In August the rate was increased to 25%, and in September – up to 30%.

In October 2022, inflation in Turkey reached 85.5%, the worst in 25 years. After the Turkish Central Bank suspended rate cuts in January 2023, inflation slowed. In May 2023 it was 39.59%, and in June – 38.21% with a target of 5%.