Turkey's central bank has decided to maintain its interest rate at 50% as of October 17, 2024. This decision comes amidst rising uncertainty regarding inflation, as indicated by recent data, which has led the bank to adopt a cautious stance on future monetary policy adjustments. The central bank's policy committee noted a slight increase in the underlying path of inflation in September, emphasizing that uncertainty surrounding inflation's trajectory has grown due to incoming data.
The last significant increase in interest rates occurred in March 2024, when the central bank raised rates by 500 basis points. This was part of a broader monetary tightening strategy initiated in June of the previous year to combat high inflation rates, which peaked at 75% in May 2023. Since then, annual inflation has decreased to 49.4%, marking the first time it has fallen below the key interest rate during this cycle.
Despite the high inflation rate, the exchange rates for foreign currencies have remained relatively stable in Turkey. As of the latest updates, the dollar is valued at approximately 34.15 liras, while the euro stands at about 37.21 liras. Analysts predict that the central bank is likely to hold off on any rate cuts until December 2024 or January 2025, following a faster-than-expected rise in monthly inflation of about 3% in September.
