Türkiye’s Central Bank on Thursday has increased the interest rate from 8.5 percentage points to 15 percentage points.
Following re-election in May, Turkish President Recep Tayyip Erdogan brought in Mehmet Simsek as the new Finance and Treasury Minister and seasoned banker Hafize Gaye Erkan as the Governor of Türkiye's Central Bank.
“The Committee decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior,” the bank said in a statement.
“While inflation in the world has been declining, it remains well above the long-term averages. As a result, central banks across the globe continue to take measures to reduce inflation.”
The bank's move came less than a month after the appointment of the new minister, who previously emphasised the need for fiscal policy and structural reforms. “The Committee will determine the policy rate in a way that will create monetary and financial conditions necessary to ensure a decline in the underlying trend of inflation and to reach the 5 percent inflation target in the medium term,” the statement said.
“Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved.”
