Turkey’s Central Bank Maintains Interest Rate at 50%

The Central Bank of Turkey decided to keep its interest rate at 50% per annum during its meeting on August 20. This marks the fifth consecutive meeting where the rate has remained unchanged.

In its statement following the meeting, the Central Bank noted that core inflation in Turkey was lower than the average level for the second quarter in July.

"Indicators for the third quarter suggest that domestic demand in Turkey continues to weaken, contributing to a slowdown in inflation," the statement said.

The report also mentioned that while the growth rate of goods prices is decreasing, inflation in the services sector has not yet followed this trend.

The last change in the interest rate occurred in March, when it was raised by 500 basis points, from 45% to 50%. This is the highest level in 22 years. The increase was made in response to inflation that exceeded forecasts.

To address inflation, the Central Bank of Turkey has raised its rate nine times since the summer of 2023, increasing borrowing costs by a total of 4150 basis points.

Experts anticipate that the Central Bank will lower the interest rate for the first time by the end of this year.