Turkey’s central bank (TCMB) announced Thursday afternoon (August 24) an interest rate hike from 17.5% to 25%.
The announcement was made following a meeting by the Monetary Policy Committee (PPK). The increase was the third under the tenure of central bank president Hafize Gaye Erkan, who took office in June.
The first increase following Turkey’s general elections in May took place on June 22, which was the country’s first interest rate hike in some 27 months. Raised from 8.5% to 15%, the measure sought to curb devaluation of the Turkish Lira following President Recep Tayyip Erdoğan’s election to a third presidential term on May 28.
A later hike brought the figure up 2.5 points to 17.5%.
The aftermath of President Erdoğan’s election victory, which saw the appointment of Treasury and Finance Minister Mehmet Şimşek and Central Bank President Hafize Gaye Erkan, was billed by many as a ‘return to economic orthodoxy’ following years of runaway inflation exacerbated by low interest rates, a hallmark of President Erdoğan’s economic policy.
Following the interest rate hike on Thursday afternoon, the PPK made the following announcement:
“The policy rate has been determined in a way that aims to reduce the underlying trend of inflation and provide the monetary and financial conditions that will bring inflation down to our 5% target in the medium term. Monetary tightening will be gradually strengthened as and when necessary until a significant improvement in the inflation outlook is achieved. Indicators regarding inflation and the underlying trend of inflation will continue to be closely monitored and the PPK will continue to use all the tools at its disposal in order to achieve our main objective of price stability.”
Written/translated for Medyascope by Leo Kendrick
