Turkey raises 6.5 points, to 15%, the interest rate, for the first rise in 27 months

This content was published on Jun 22, 2023 – 11:29
June 22, 2023 – 11:29

Istanbul (Türkiye), June 22 (EFE). – The Central Bank of Turkey raised interest rates to 15% this Thursday, up 6.5 points from the value in force since last February, in the first increase in the money rate in 27 months. .

It is the first gesture of the new governor of the institution, Hafiza Gay Erkan, appointed this month, to control inflation, which is currently close to 40%, and the volatility of policies dictated so far by the country’s president, Recep Tayyip. He was re-elected last May.

“The Monetary Committee decided to raise interest rates (one week ago) from 8.5% to 15%,” the bank said in a statement, indicating that more increases will follow in the future.

To achieve its medium-term inflation target of 5%, the Bank will raise rates “as gradually and in due course as is necessary, until a significant improvement in inflation is achieved,” the text reads.

“The committee decided to start the process of monetary deflation to determine the course of deflation as soon as possible, consolidate inflation expectations and control the deterioration in price-setting behavior,” the statement said.

The rise is also supposed to stabilize the lira, which has lost 60% of its value in two years, with a new decline of 15% in the first week of the current month.

However, in the first moments after announcing the decision, the lira fell.

The bank’s statement stressed that inflation around the world remains above the usual average and that all central banks are taking measures to control it.

“In our country, recent indicators point to an increase in underlying inflation trends. The main drivers are strong demand in the domestic market, cost pressure and stagnant service inflation. In addition, the committee expects a deterioration in the price situation will add additional pressure on inflation, ”the bank analyzes. EFE

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