Turkey’s Central Bank Maintains Key Interest Rate

Turkey’s central bank kept its key interest rate at 50.0% for the fourth consecutive meeting, indicating no immediate plans for monetary policy easing. This decision aligns with economists’ expectations.

The central bank raised rates from 8.5% last June to combat inflation, diverging from President Recep Tayyip Erdogan’s previous low-rate policy. Despite a significant drop in inflation to 71.6% in June from 75.5% in May, the bank anticipates a temporary rise in July.

Nicholas Farr, an economist at Capital Economics, noted that interest-rate cuts are not imminent. He predicts inflation will decrease in the latter half of 2024, ending the year at 42%, higher than the central bank’s 38% forecast.

The central bank reiterated its commitment to a tight monetary policy until a sustained decline in underlying inflation trends is achieved.