Turkey raised its main interest rate from 8,5 percent to 15 percent, reversing one of President Recep Tayyip Erdogan's economic policies.
The 6,5 percent increase was far lower than economists had expected, but it marked a major policy shift by his new economic team to tackle rising inflation.
The Turkish leader has so far insisted on reducing interest rates. Inflation is almost 40 percent, and Turks have been in a cost-of-living crisis for a long time, reports Klix.ba.
The head of the Turkish central bank, Hafize Gaye Erkan, arrived from the United States of America (USA) only this month after Erdogan was re-elected as president.
Her decision raised interest rates for the first time since December 2020, after a turbulent period in which three central bank governors were fired in less than two years as they tried to stick to orthodox economics, writes the BBC.
In its announcement, the Bank's Monetary Policy Committee made it clear that this move is the beginning of a gradual process, with the goal of bringing inflation down to five percent.
Its members said they had decided to begin a process of monetary tightening, in order to establish a course of disinflation as soon as possible and control the deterioration of price controls.
Erdogan's problem is that Turkey's inflation rate remains high, and that its central bank's reserves have fallen to critically low levels after spending billions of dollars trying to prop up the lira.
Interest rates have fallen from 19 percent two years ago to 8,5 percent in the last few months, and the change in direction will have repercussions for a country already in economic crisis.
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