Interest rates in Turkey exceed the rate criticized by President Erdoğan

Turkey’s policy interest rate, raised to 50 percent by the central bank, has now exceeded the 47 percent rate that President Erdoğan pointed to targeting his predecessors.

Turkey’s interest rate on March 21 surpassed the 47 percent rate President Recep Tayyip Erdoğan used as a threshold in 2013 for criticizing previous governments after the central bank raised its policy rate to 50 percent.

On April 30, 2013, Erdoğan emphasized the interest rate cuts that started at that time in his tweet and criticized his predecessors, “When we took office, the interest rate was 47 percent. We see together where we have come from.”

The economic administration that took office after the general elections in May 2023 discarded Erdoğan’s unorthodox policy of trying to reduce inflation by lowering interest rates, which had been in place for years.

Turkey’s policy rate was 8.5 percent before last year’s elections. Following the appointments of Mehmet Şimşek as the Treasury and Finance Minister and Hafize Gaye Erkan as the Central Bank Governor, the bank raised the interest rate for the first time in 27 months in June 2023 and raised it to 15 percent.

The policy rate, which was raised to 45 with the increases until January, was kept constant in February. Although economists predicted that the interest rate would be kept constant in March due to the upcoming local elections, the interest rate was raised to 50 percent on March 21.

The Central Bank has increased the interest rate by 41,500 basis points since June 2023.

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