FX.co ★ Turkey’s central bank keeps policy tight amid rampant inflation

The Turkish economy is under renewed pressure from record inflation and high interest rates. On July 23, Turkey’s central bank decided to keep its interest rate unchanged at a record level of 50% for the fourth consecutive meeting.

The regulator maintained its tight monetary policy amid elevated inflationary pressures. Earlier, in March 2024, the central bank hiked its policy rate from 45% to 50%, citing a deteriorating inflation outlook.

Data from Turkey's statistics institute TUIK showed that annual inflation in the country slowed to 71.6% in June, marking the first decline in a year. In May, the inflation rate was at 75.45%. According to policymakers, the central bank is ready to stick to a hawkish monetary stance until a sustained decline in inflation to the target level is observed.

Earlier it was reported that the Turkish government plans to revise tax policies and introduce minimum payment rates for businesses. In this context, the Justice and Development Party (AKP) led by President Recep Tayyip Erdogan intends to pass a package to broaden the tax base. Turkish authorities believe that tightening fiscal policy will help curb rampant inflation.