Turkey Raises Interest Rate by Whopping 15% To Combat Inflation

• The first hike since March 2021, represents a leap from the current 8.5%.
• Central banks throughout the globe have hiked rates to offset surges in consumer prices.

Turkey’s central bank delivered a significant interest rate rise on Thursday, signaling a turn towards more traditional economic strategies to tackle sky-high inflation. The bank’s benchmark interest rate was increased by 6.5 basis points, to 15%. The first hike since March 2021, represents a leap from the current 8.5% but falls short of market forecasts.

It happened during the central bank’s first interest rate-setting meeting after Erdogan nominated two highly regarded figures to head the bank and the finance ministry. A departure from Erdogan’s unconventional view that lowering interest rates combat inflation may be seen in the rate rise.

Interest Rate Hikes Worldwide

Central banks throughout the globe have swiftly hiked rates to offset surges in consumer prices. Connected to the recovery from the epidemic and Russia’s invasion of Ukraine. Despite the fact that traditional economic theory recommends quite the opposite. The Bank of England and the Swiss National Bank were just two of the European central banks that raised their benchmark interest rates on Thursday.

Although he has said that he would “accept” his new finance minister’s plans, Erdogan, an “enemy” of high borrowing prices, has reiterated that his views have not altered. This sparked concerns about the autonomy of Turkey’s central bank.

In the wake of notable asset management companies, including BlackRock, submitting applications for spot Bitcoin exchange-traded funds (ETFs). Bitcoin (BTC), the king of cryptocurrencies, had a large spike for the second day in a row. Over the previous day, the cryptocurrency with the highest market capitalization has increased by about 5%.