The Turkish Central Bank decided for the first time in more than two years to raise the main interest rate from 8.5% to 15%, and this is the first decision of the new head of the Turkish Central Bank, Hafize Gaye Erkan.
The Turkish Central Bank said in its statement on Thursday, that it had decided to raise the interest rate by 650 points mainly, to 15%, on repurchases for a week, and indicated that it had decided to start the monetary tightening policy.
The decision was much lower than expected, as economists expected the index to be raised to 20%, and some expected 40%.
This step considered a major shift in Türkiye’s policy with the appointment of Hafize Gaye Erkan as the head of the Turkish Central Bank with the beginning of the new term of President Recep Tayyip Erdoğan.
For more than two years, Erdoğan has been insisting on reducing interest rates despite the significant rise in inflation, following a policy described as unconventional and contrary to what usually followed by raising interest rates in order to curb prices.
Immediately after the decision of the Turkish Central Bank to raise the main interest rate from 8.5% to 15%, the Turkish lira fell to a new record low against the US dollar.
The US dollar exchange rate rose to reach the value of 25.21 lira, for the first time in the history of the Turkish currency.