Turkey’s central bank just announced a major interest rate hike, bumping the main rate up by 3.5 points to 46%, officially ending a three-month phase of monetary easing aimed at tackling inflation.
The Central Bank's Monetary Policy Committee raised the one-week repo rate from 42.5% to 46%. It also adjusted the overnight lending and borrowing rates to 49% and 44.5%, respectively.
In a statement, the committee said:
"The tight monetary policy stance will remain in place until there’s a clear and lasting drop in inflation and price stability is achieved."
They noted that core inflation eased in March, but also warned that basic goods prices might tick up slightly in April due to changes in financial markets. Meanwhile, service price inflation is expected to stay steady.
They added:
"The rise of global trade protectionism could slow down the decline in inflation in Turkey by affecting commodity prices and capital flows."
The committee also pointed to the global ripple effects of tariffs, especially those that were introduced in response to measures previously taken by former U.S. President Donald Trump on U.S. imports.
