Turkey has increased its base interest rates by a whopping 6.5%, the clearest indication yet that the unconventional economic policy dubbed “Erdonomics” might be history now in Recep Tayyip Erdogan’s new government.
Turkey’s central bank delivered a large 6.5% interest rate rise on Thursday, boosting the rates it charges commercial lenders for borrowing money to 15% from 8.5%.
It’s the first time Turkey has raised its rates since March 2021 — indeed the country had been raising eyebrows by cutting its rates even as inflation spiraled out of control as of late.
“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,” the central bank said.
The bank also promised to “simplify and improve” policies that past governments under President Recep Tayyip Erdogan used to try and weather Turkey’s worst economic crisis since the 1990s. Analysts anticipate that the rate is likely to reach a level around 25% by the end of the year — roughly where it was as recently as 2019.
