Turkey’s c. bank to maintain current rates until Q4
Turkey’s central bank plans to maintain its current policy rate of 50 per cent until the fourth quarter, Reuters reported on Wednesday. The bank had increased the rate by 500 basis points in March, reversing a low-rate policy.
Since June, borrowing costs have increased by 4,150 basis points, but policymakers plan to reduce the rate by 250 basis points in Q4 to 47.5 per cent, with further cuts to 30.0 per cent by the end of 2025.
Central bank Governor Fatih Karahan announced last week that the rate-hiking cycle has ended and projected a 36 per cent inflation rate by year-end. However, economists predict an average inflation rate of 44.2 per cent this year, up from the 42.1 per cent forecasted in January.
Turkey’s annual inflation rate rose to 68.5 per cent in March and is expected to peak at around 70 per cent this quarter before declining in the second half of the year.
In recent elections, Erdogan’s AK Party suffered significant losses, largely due to the cost-of-living crisis. The party lost mayoral seats in several provinces, including Istanbul and Ankara. This marks the worst election loss for the AKP since its inception over two decades ago.
Economists predict Turkey’s economy will grow by 3.0 per cent this year and 3.3 per cent next year, according to a poll conducted from April 19–23. This is a slight increase from the 2.8 per cent and 3.5 per cent growth predicted in January’s poll.
