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Turkey hikes interest rates by 6.5 percentage points to 15%

The move by the central bank marks a dramatic departure from President Erdogan's yearslong policy of low rates.
People queue to buy olive oil, which is sold cheaply by the Agricultural Products Office in Ankara, among soaring inflation in the country, Feb. 17, 2022.

Turkey’s Central Bank hiked interest rates by a drastic 6.5 points to 15% on Thursday, a dramatic U-turn from Turkish President Recep Tayyip’s Erdogan long-term but unconventional economic policy of low-interest rates, which has caused soaring inflation.

The tightening of monetary policy follows the central bank's first monetary policy committee meeting held under the bank’s newly appointed first-ever female Governor Gaye Erkan, “The committee decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations and to control the deterioration in pricing behavior,” a statement from the bank said.

“Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved,” the statement added.

The Turkish lira dropped to its weakest value against the dollar on record after the small-than-expected rate hike. As of mid-afternoon Istanbul time on Thursday, there were 24.17 liras to the dollar, compared to 23.81 before the announcement. 

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