Turkey’s central bank, under the leadership of newly appointed governor Fatih Karahan, opted to keep the key interest rate steady at 45%, marking a pause in the recent series of aggressive rate hikes aimed at curbing high inflation. This decision aligns with expectations following the bank’s assertion last month that the necessary monetary tightness for “establishing the disinflation course” had been achieved.
The central bank’s statement on Thursday indicated that the current interest rate would persist until there is a “significant and sustained decline in the underlying trend of monthly inflation.” President Recep Tayyip Erdogan appointed Karahan on February 3, succeeding Hafize Gaye Erkan, who resigned amid allegations of nepotism.
During Erkan’s tenure, the benchmark interest rate rose from 8.5% in June to the current 45%, aiming to address economic challenges triggered by unconventional policies. Despite these hikes, inflation remains elevated, with consumer prices increasing nearly 65% in January. The Turkish lira also reached a new record low against the dollar this week.
Karahan, a former deputy governor under Erkan, has emphasized the commitment to a policy fighting inflation, aligning with Finance Minister Mehmet Simsek’s directives. Stay informed about Turkey’s economic developments as the central bank navigates the complexities of balancing inflation and economic stability.
