Residents waiting at a bus stop under a large Turkish flag in Istanbul, Turkey, on Sunday, April 30, 2023.
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Turkey’s central bank on Thursday hiked its key interest rate by another 250 basis points to 45%.
The hike to the benchmark one-week repo rate was in line with economists’ expectations.
It comes amid an ongoing battle against double-digit inflation for Turkey’s monetary policymakers, with the rate hike the latest step in that effort.
Inflation in Turkey increased to 64.8% year-on-year in December, up from 62% in November, and the country’s currency, the lira, hit a new record low against the U.S. dollar earlier in January, breaking 30 to the greenback for the first time.
Analysts predict this will be the last hike for some time, especially with local elections approaching in March.
The central bank’s decision is the latest in a series of interest rate increases — now eight consecutive hikes since the May 2023 elections — that have been painful for Turks, as the country grapples with a dramatically weakened currency and skyrocketing living costs.
The last several years of high inflation are in large part the result of stubbornly loose monetary policy by the Ankara government.
The lira is down 38% against the dollar year to date and has lost more than 80% of its value against the greenback over the last five years.
This is a developing news story and will be updated shortly.