Turkey’s central bank delivered a large interest rate hike Thursday, signaling a shift toward more conventional economic policies to counter hyperinflation, but the rate hike was below the consensus as the financial community expected a rate hike at least to 21%.
The bank raised its key rate by 6.5 percentage points, boosting it to 15%.
The increase — a significant jump from the current 8.5% — is the first since March 2021 and comes after Erdogan appointed a former Goldman Sachs banker, Hafize Gaye Erkan as governor of the central bank and then a former former finance minister and Merrill Lynch banker, Mehmet Simsek to run the finance minister role again.
The rate hike is an indication that the country is moving away from Erdogan’s unorthodox belief that lowering interest rates fights inflation but markets are prudent in believing a U turn.
USD/TRY is trading at record high 24.19, up 2.30%
