ANKARA — Turkey’s Central Bank hiked interest rates Thursday by 500 basis points, from 30% to 35%.
Explaining the hike, the bank cited a larger than expected increase in inflation in the third quarter and geopolitical risks, the latter an apparent reference to impacts of the ongoing Hamas-Israel war.
“In the third quarter, inflation readings were above expectations,” said a statement released after the bank's monthly monetary policy committee meeting. “Geopolitical developments pose risks to the inflation outlook due to oil prices,” it also stated.
The hike marks the fifth in a row since June under the economy's new leadership, which was appointed following a U-turn in economic policy at the start of President Recep Tayyip Erdogan's new term in office in June. Under Erdogan's unorthodox policy of keeping rates low to promote economic growth at the expense of skyrocketing inflation, the Turkish lira tumbled to record low levels against hard currency.
