The Central Bank of Türkiye (TCMB) implemented a significant increase in interest rates on Thursday. The move aimed to combat the persistent issue of double-digit inflation, which has placed a heavy burden on households, making it difficult for them to afford essential commodities such as food and other basic goods.
Read more: Türkiye’s Central Bank raises interest rates to 35 percent to reign in inflation
In a series of consecutive efforts to combat soaring inflation, TCMB has once again raised its policy rate by an impressive 5 percentage points, bringing it to a level of 40 percent. This marks the sixth substantial interest rate hike in a row, as the bank remains determined to tackle the persistently high inflation rate, which reached an alarming 61.36 percent last month.
“The current level of monetary tightness is significantly close to the level required to establish the disinflation course,” the bank said. “Accordingly, the pace of monetary tightening will slow down and the tightening cycle will be completed in a short period of time.
According to a recent survey conducted by Anadolu Agency (AA), economists had anticipated a rate hike of 250 basis points by the central bank.
Similarly, a Reuters poll conducted on Monday revealed that 21 institutions participating in the poll expected the bank to raise its policy rate by 250 basis points to reach 37.5 percent during the current week. However, one institution predicted a 300 basis points increase, while another predicted a 350 basis points increase.
Series of interest rate hikes
Since June, the bank has implemented a series of interest rate hikes, raising its one-week repo rate by a significant 3,150 basis points. In the last two months alone, the bank has increased the rate by 500 basis points in each consecutive month.
Based on the most recent data provided by the Turkish Statistical Institute (TurkStat), Türkiye’s annual inflation rate experienced a slight decrease, easing from a nine-month high of 61.53 percent in September to 61.36 percent in October.
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