The Central Bank of Turkey raised the key rate to a record 50%

The Central Bank of Turkey has decided to raise the key interest rate by 500 basis points, setting it at 50% per annum. The regulator has not lowered the rate since June 2023. 

The reason for this step was the high monthly inflation in February, which significantly exceeded expectations. Representatives of the Central Bank note that inflation in the service sector, inflationary expectations, geopolitical risks and rising food prices support inflationary pressure today.

They also stated that the Central Bank will adhere to a strict monetary policy until a noticeable and steady decrease in the inflationary trend is achieved. In the event of a deterioration in economic forecasts, measures will be further tightened.

In January, the regulator raised the key rate from 42.5% to 45% per annum – the highest level since 2003, when it reached 44%. At a meeting in February, the regulator kept the rate at the same level for the first time in eight months.