Turkey’s central bank has raised its key interest rate from 30% to 35% in an effort to combat high inflation, the rate hike aligns with economists’ expectations, CNBC reports.
The central bank cited that price increases in the third quarter were stronger than anticipated and that monetary tightening was necessary to control inflation expectations. The bank expressed its commitment to further strengthening monetary tightening as needed until a significant improvement in the inflation outlook is achieved.
The rate increase is part of a series of moves to address inflation after a long period of unorthodox monetary policy of low rates that contributed to skyrocketing inflation rates in Turkey. Inflation is expected to exceed 60% by the end of 2023, and the Turkish lira has depreciated, making imports more expensive.
Economists suggest that further rate hikes are necessary to address the country’s economic challenges and maintain investor confidence in Turkey.
