Turkey’s central bank left the key interest rate unchanged at 14% at its meeting today. For the second month in a row, it has left interest rates unchanged, even though inflation in Turkey has risen by almost 50%.
The central bank had previously said it would end the rate-cutting cycle to study the effects of its recent monetary policy actions.
The central bank already cut interest rates in September 2021 and has fallen further to a total of 5.00% under pressure from Turkish President Recep Tayyip Erdogan, who has already fired several central bank chiefs.
The Turkish central bank’s interest rate cut has caused the lira to plunge 44% over the past year, making it the worst-performing emerging market currency. Foreign investors sold off as they doubted the independence of the central bank.
In addition, inflation in Turkey rose by almost 50% to 48.69% in January, reaching its highest level in 20 years.
The central bank also expects inflation to slow to 23.20% later this year.