Turkey’s central bank keeps key interest rate stable amid high inflation


Turkey’s central bank on Thursday kept its main interest rate unchanged for a fourth month even as soaring inflation hit a 20-year high and eroded people’s purchasing power.

In a statement following a monetary policy committee meeting, the bank said it was keeping its key rate constant at 14%.



The move was in line with President Recep Tayyip Erdogan’s opposition to high borrowing costs in an effort to boost growth, investment and exports. The Turkish leader insists that rising interest rates cause inflation, a position that contradicts established economic thinking.

Turkey’s central bank has cut rates by 5 percentage points since September despite high inflation, then suspended them since January. The series of rate cuts last year triggered a currency crisis and rising consumer prices that were compounded by Russia’s invasion of Ukraine and soaring energy prices.

Annual inflation hit 61.14% in March, adding pressure on households that were already struggling to buy basic commodities. The Turkish lira lost 44% of its value against the US dollar last year.

To soften the blow to households, the government introduced tax cuts on basic necessities and adjusted electricity prices.

By comparison, the United States, the United Kingdom and the 19 countries that use the euro have experienced high levels of inflation for decades, respectively 8.5%, 7% and 7.5%, but are far from reaching the breathtaking rate of Turkey. The central banks of the United States and the United Kingdom raised interest rates to fight inflation.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor

Stephen V. Lee