The Turkish Central Bank raises interest rates by 250 basis points

In its initial meeting of 2024, the Turkish Central Bank opted to further raise interest rates by 250 basis points, bringing the new rate to 45%, aligning with market expectations. The decision, announced on Thursday, January 25, reflects the ongoing effort to curb inflation and stabilize the Turkish economy.

The Central Bank’s statement highlighted that Turkey’s core inflation rate in December had increased in line with expectations outlined in the latest inflation report. Concurrently, recent assessments indicate a moderation in domestic demand, aligning with anticipated inflation deceleration.

Following the Monetary Policy Committee’s monthly meeting, the Central Bank stated, “The monetary tightening required to determine the path of inflation deceleration has been achieved… and this level will be maintained as long as it is needed.”

Turkey experienced an acceleration in its annual inflation rate, reaching 64.8% in December 2023, marking the highest level since November 2022 and surpassing the 62% recorded in the previous month.

The Central Bank emphasized that the current interest rate level will be sustained until a significant slowdown in the fundamental trend of monthly inflation is observed. This move underscores the Central Bank’s commitment to addressing inflationary pressures and fostering stability in the Turkish economy.