FAMAGUSTA GAZETTE – Türkiye’s central bank raised its key interest rate by 3.5 percentage points Thursday, bringing it from 42.5% to 46%, reversing its previous easing cycle.
The bank’s Monetary Policy Committee said the underlying inflation trend moderated in March but noted that core goods inflation increased in April. It also warned that domestic demand remained stronger than expected, potentially slowing disinflation.
“Leading indicators point to a level of domestic demand above projections despite some loss of momentum in the first quarter, suggesting a lower disinflationary impact,” the committee said.
The bank is closely monitoring the effects of rising global trade protectionism on inflation, as well as its impact on economic activity, commodity prices, and capital flows.
It said inflation expectations and pricing behavior remain risks to the disinflation process.
The rate hike marks a shift from March, when the bank lowered its policy rate by 2.5 percentage points to 42.5%, citing improved inflation indicators.
Türkiye has struggled with rising inflation for years. From June 2023 to March 2024, the central bank raised its key interest rate from 8.5% to 50% to tighten monetary policy before beginning an easing cycle at the end of last year.
