ISTANBUL: Turkiye’s central bank sharply lifted its key policy rate for the fifth month running on Thursday as part of its politically charged battle against historically high inflation rates.
The bank said it was taking its main lending rate to 35% from 30% because inflation readings were above expectations over the past 3 months, AFP reported.
Its statement also retained a pledge to raise rates further in gradual manner until a remarkable improvement in the inflation outlook is achieved.
Turkey’s official annual inflation rate peaked at 85% last October and climbed back up above 60% last month.
The bank has now more than quadrupled borrowing costs since President Recep Tayyip Erdogan dropped — or at least put aside — his lifelong objection to the idea that raising interest rates helps fight inflation.
President Erdogan had entered a difficult May election vowing to never allow the bank to raise its key rate while he was in the office.
He reversed course after winning the election and allowing a new team of Wall Street-trained economists to take on the job of steering the country out its worst cost-of-living crisis of his two-decade rule.
Erdogan has given his new policy team multiple crucial votes of support in the past few months.
Turkiye’s fight against inflation
He told his ruling party faithful on Wednesday that the country was waging a “multifaceted fight against inflation”.
He said in televised remarks that it takes time to see the measures taken in the economy reflect on people’s daily lives.
