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Turkey raises interest rate to 45% due to inflation nearing 65%

Turkey raises interest rate to 45% due to inflation nearing 65%
January 25, 2024



Turkey’s central bank has increased its key interest rate by 250 basis points to 45%, consistent with predictions. The move is part of the country’s efforts to combat double-digit inflation. In December, inflation rose to 64.8% year-on-year, up from 62% in November. As a result, the Turkish lira hit a new record low against the U.S. dollar in January, surpassing 30 lira to the dollar for the first time. Analysts anticipate that this could be the final rate hike for a period, particularly with local elections approaching in March. Since the May 2023 elections, the central bank has implemented eight consecutive rate hikes. These hikes have had a significant impact on Turkish residents, who are contending with a significantly weakened currency and escalating living expenses. The ongoing high inflation is largely attributed to persistently loose monetary policy by the Ankara government. The lira has depreciated by 38% against the dollar this year and has declined by over 80% against the dollar in the past five years.
This is a developing news story and will be updated shortly.

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