Turkey: New Maximum Rate Hike To Curb Inflation

The tightening of monetary policy promoted by Turkish Central Bank President Hafize Gaye Erkan continues in an attempt to curb inflation. The woman who has been at the helm of Turkey’s monetary regulator since June has radically reversed the low-rate policy pursued by the central bank last year at the urging of President Recep Tayyip Erdogan. The Turkish leader fired the same number of Central Bank managers in 4 years.

This is the third interest rates increase in three months; this time it will be 750 basis points, at 25%. The rise exceeded analysts’ expectations, which followed a 250-point gain last month and has seen rates triple since June.

The institution confirmed that “it was decided to continue tightening monetary policy in order to bring down inflation as soon as possible, consolidate inflation expectations, and control the deterioration in the price situation.”

The Central Bank expects that the inflation rate at the end of the year will range from 22.3% to 58%. In July, this figure reached 48%.