Turkey's central bank hikes interest rate by 35% to control inflation

Oct Sat 2023 12:21:54

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Turkey's central bank hikes interest rate by 35% to control inflation

Kathmandu. Turkey has increased the bank interest rate to 35 percent. Earlier it was 30 percent. Turkey's currency, which is moving in the opposite direction to the principles of economy, is the weakest in history. Turkey's central bank hiked interest rates again on Thursday, pressing ahead with more conventional economic policies recently embraced by President Recep Tayyip Erdogan to fight inflation. The bank raised its policy rate by 5 percentage points to 35% after inflation hit 61.53% last month. It was the bank's fifth rate hike in as many months.

The bank said its monetary policy committee "decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible."

Erdogan had long pressured the central bank into cutting interest rates, arguing that low borrowing costs help fight inflation. That thinking, however, runs contrary to traditional economic theory. Many central banks around the world hiked interest rates to bring consumer prices under control.

Many blamed Erdogan's unorthodox policies of lowering interest rates for an economic turmoil, including a currency crisis and skyrocketing inflation that has left Turkish households struggling to afford rent and basic goods.

It is said in the statement issued by the bank that until there is a significant improvement in inflation, the tightening of the monetary policy will be strengthened in time and gradually. The president of Turkey, Recep Tayyip Erdoğan, has been the president since 2014. However, in recent times, he has gradually concentrated his power on himself.

He also mentioned that Turkey had to suffer the negative impact on the economy of most of the countries in the world. The central bank has predicted that inflation will reach 60 percent by the end of 2023.

As the value of the Turkish currency lira has fallen to a low level, imports are also expensive. Controlling skyrocketing prices has become Turkey's main headache now. The prices of most of the daily necessities, from food to house rent, have skyrocketed.