Current:Home > ScamsTurkey’s central bank hikes interest rates again in further shift in economic policies -MarketLink
Turkey’s central bank hikes interest rates again in further shift in economic policies
View
Date:2025-04-18 17:22:28
ISTANBUL (AP) — Turkey’s central bank raised its key interest rate by 5 percentage points Thursday, another large but expected hike that signals a continued push toward more traditional economic policies under President Recep Tayyip Erdogan.
The bank hiked its policy rate to 30%, saying it has kept up the “monetary tightening process” to combat rampant inflation and control price instability. Its statement said inflation in July and August was “above expectations,” hitting 58.94% last month.
It takes Turkey into a more typical economic approach after critics blamed a series of rate cuts set by Erdogan for making a cost-of-living crisis worse. Turkish households were left struggling to afford rent and basic goods as inflation surged.
Erdogan has long argued that lowering interest rates helps fight inflation, a theory that runs contrary to traditional economic thinking. The Turkish central bank started cutting rates in late 2021 under pressure from Erdogan.
Central banks around the world, meanwhile, have been hiking rates to bring consumer price rises under control following the COVID-19 pandemic and Russia’s war in Ukraine. Now, banks from the U.S. Federal Reserve to Bank of England are hitting pause as they near the end of their aggressive increases.
Turkey has work to do to catch up in its fight against inflation.
After winning reelection in May, Erdogan appointed a new economic team, signaling a return to more conventional policies.
The team includes former Merrill Lynch banker Mehmet Simsek, who returned as finance minister, a post he held until 2018, and Hafize Gaye Erkan who took over as central bank governor.
Before their appointments, the central bank had cut its key interest rate from around 19% in 2021 to 8.5% earlier this year. Erdogan has fired three central bank governors who resisted pressure to cut rates before appointing Erkan’s predecessor in 2021.
Economists say Erdogan’s unorthodox policies exacerbated economic turmoil, leading to currency and cost-of-living crises that have brought hardship to households. Erdogan insists his economic model stimulates growth, exports and employment.
Following Erkan’s appointment, the bank has raised its key rate a series fo time: by an aggressive 7.5 percentage points in August, 2.5 percentage points in July and 6.5 percentage points in June.
The Turkish lira — which has lost some 30% of its value against the U.S. dollar since the start of the year — dropped slightly against the greenback Thursday.
veryGood! (35127)
Related
- California DMV apologizes for license plate that some say mocks Oct. 7 attack on Israel
- Aerie's Clearance Section Has 76% Off Deals on Swimwear, Leggings, Tops & More
- Sun's out, ticks out. Lyme disease-carrying bloodsucker season is getting longer
- Jamil was struggling after his daughter had a stroke. Then a doctor pulled up a chair
- Who are the most valuable sports franchises? Forbes releases new list of top 50 teams
- How an abortion pill ruling could threaten the FDA's regulatory authority
- 10 Cooling Must-Haves You Need if It’s Too Hot for You To Fall Asleep
- U.S. Soldiers Falling Ill, Dying in the Heat as Climate Warms
- Biden administration makes final diplomatic push for stability across a turbulent Mideast
- For the first time in 15 years, liberals win control of the Wisconsin Supreme Court
Ranking
- Rolling Loud 2024: Lineup, how to stream the world's largest hip hop music festival
- Full transcript of Face the Nation, June 18, 2023
- Kate Spade 24-Hour Flash Deal: Get This $360 Tote Bag for Just $76
- What will AI mean for the popular app Be My Eyes?
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- Alibaba replaces CEO and chairman in surprise management overhaul
- Joy-Anna Duggar Gives Birth, Welcomes New Baby With Austin Forsyth
- Soaring Costs Plague California Nuke Plant Shut Down By Leak
Recommendation
The Louvre will be renovated and the 'Mona Lisa' will have her own room
Why Are Hurricanes Like Dorian Stalling, and Is Global Warming Involved?
Why do some people get UTIs over and over? A new report holds clues
Top CDC Health and Climate Scientist Files Whistleblower Complaint
What were Tom Selleck's juicy final 'Blue Bloods' words in Reagan family
California’s Landmark Clean Car Mandate: How It Works and What It Means
‘A Death Spiral for Research’: Arctic Scientists Worried as Alaska Universities Face 40% Funding Cut
U.S. appeals court preserves partial access to abortion pill, but with tighter rules