Turkish central bank keeps rates at 14% under pressure from Erdogan despite inflation

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The Central Bank of Turkey (TCMB) kept the basic interest rate at 14% for the sixth consecutive month, in a monetary policy decision released this Thursday (23).

While inflation in the country is at 24-year highs, the institution bows to pressure from Turkish President Recep Tayyip Erdogan to avoid tightening credit costs.

In a statement similar to that of the previous meeting, the Turkish central bank does not name the war in Ukraine, but says that “the escalation of geopolitical risks” has weakened global economic activity and boosted prices.

According to the entity, the inflationary scenario is fueled by rising energy prices, supply shocks and “temporary effects of price formations that are not supported by economic fundamentals.

The TCMB argues that the disinflationary process should begin, thanks to measures taken to stabilize prices.

In May, Turkey’s Consumer Price Index (CPI) accelerated to an annual rate of 73.5%, the highest since 1998. The result is more than 14 times higher than the bank’s 5% target. central.

Despite this, President Erdogan insisted that interest rates would not be raised.

At the end of last year, the Turkish central bank cut the base rate from 19% to the current level, giving in to pressure from the political leader, who removed a number of the institution’s leaders so that his policy could be implemented.

Source: CNN Brasil

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