The Turkish Central Bank raised the key rate to 30%

The Central Bank (CB) of Turkey raised the key rate by 500 bps. p. – up to 30%, reported press service of the regulator. This is the fourth rate increase since the end of June.

“Committee [по денежно-кредитной политике] decided to continue the process of tightening monetary policy in order to set a course to reduce inflation as soon as possible, consolidate inflation expectations and control the deterioration of pricing policy,” the regulator said in a statement.

The country’s Central Bank explained that inflation indicators in July-August were higher than expected, and high domestic demand, a steady increase in prices in the service sector and oil, as well as worsening inflation expectations of the population and business create additional risks for inflation growth.

At the same time, monthly inflation tends to decrease; according to the regulator, inflation by the end of the year will be close to the upper limit of the forecast range.

“Foreign direct investment, improved external financing conditions, continued growth in foreign exchange reserves, the positive impact of tourism income on the current account balance and growing domestic and external demand for Turkish lira-denominated assets will make a significant contribution to increasing price stability,” the regulator is confident. .

The Turkish Central Bank also promised to “resolutely use” all the tools at its disposal to stabilize inflation.

In early June, after being re-elected, President Recep Tayyip Erdogan appointed a new head of the Central Bank, 44-year-old Hafize Gaye Erkan. International experts welcomed the decision, as Erkan is considered a supporter of traditional PrEP. In June, the Turkish Central Bank raised the rate for the first time since March 2021. It almost doubled – from 8.5 to 15%. However, even then many experts warned that these measures were insufficient.

On July 21, the Turkish regulator raised the rate by 250 bps. p. – up to 17.5%. Analysts predicted that the rate would reach 20%, Vedomosti wrote then. On August 24, the country’s Central Bank raised the rate for the third time, and immediately by 750 bps. p. – up to 25%.

In October 2022, inflation in Turkey reached 85.5%, the worst in 25 years. After the Turkish Central Bank suspended rate cuts in January 2023, inflation slowed. In May 2023 it was 39.59%, and in June – 38.21% with a target of 5%.