Central Bank of Turkey continues interest rate hikes amid inflation concerns
The Central Bank of the Republic of Turkey (TCMB) raised its one-week repo rate to 35.00% on Tuesday to curb rising inflation, marking the fifth consecutive increase since June 2023. This unprecedented cycle has resulted in a total increase of 2,650 basis points.
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The TCMB identifies inflation as a significant source of concern due to strong domestic demand, persistent services inflation, and rising inflation expectations.
Factors such as taxes, wages, and currency weakness are significantly impacting prices and continue to create inflationary pressure. Geopolitical tensions, such as the Israel-Hamas conflict, pose potential risks to inflation through fluctuations in oil prices. The TCMB is adopting a gradual approach to quickly initiate the disinflationary process and anchor inflation expectations. The TCMB maintains its hawkish stance with plans for additional monetary tightening to ensure a significant improvement in the inflation outlook. The Monetary Policy Committee will announce its next decision on November 23.