Turkish Central Bank Holds Interest Rates Despite Further Rising Inflation

At its meeting today, the Turkish central bank left its key interest rate unchanged at 14% for the third month in a row, even though inflation in Turkey has risen to over 50%.

Inflation in Turkey rose to 54.4% in February, its highest level in almost 20 years, mainly due to an increase in energy prices and a weaker lira.

Turkey’s central bank has announced a new economic model supported by low-interest rates and a weak lira.

According to the central bank, it will continue to take measures to ensure price stability and financial stability.

Previously, the central bank had started cutting interest rates in September 2021. It has steadily lowered interest rates to 5.00% under pressure from Turkish President Recep Tayyip Erdogan, who has already dismissed several central bank governors. Erdogan claimed that a low-interest rate policy would boost exports and employment in the country.

The Turkish central bank’s interest rate cut has triggered a crisis for the lira, which has fallen 44% in the past year, making it the worst-performing currency in emerging markets. Foreign investors sold their shares as there was no longer any confidence in the independence of the central bank.

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