Turkish central bank raises key interest rate to 50% as inflation soars

→ Conflict In Israel Sends Gold Soaring ???? Here’s How To Get Your Share (From Colonial Metals) (Ad)

People carry goods in Eminonu trade neighbourhood in Istanbul, Turkey, Wednesday, March 20, 2024. Turkey's central bank raised its key interest rate by 5 percentage points on Thursday, resuming a policy of rate hikes aimed at combating soaring inflation that is causing households severe economic pain. (AP Photo/Emrah Gurel)

ANKARA, Turkey (AP) — Turkey’s central bank raised its key interest rate by 5 percentage points on Thursday, resuming a policy of rate hikes aimed at combating soaring inflation that is causing households severe economic pain.

In a surprise decision, the central bank said it was raising the benchmark one-week repo rate to 50%. The bank had been widely expected to keep the benchmark rate steady for a second month, ahead of mayoral elections on March 31.

Get stock market news alerts:

The bank said it had decided to raise the benchmark rate “in response to the deterioration in the inflation outlook.”

“Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed,” the bank said.

Annual consumer price inflation rose to 67% in February, coming in above expectations. Surging prices have left many families struggling to afford food, rent and utilities.

President Recep Tayyip Erdogan is a long-time proponent of an unorthodox economic policy of slashing interest to tame inflation — a theory that runs contrary to conventional economic thinking. A series of rate cuts by the central bank spurred double-digit inflation and a currency crisis until Erdogan reversed course following his re-election in May and appointed a new economic team.

Under the new team, the central bank had raised the benchmark interest rate from 8.5% in June to 45% in January before pausing the rate hikes last month.

“Although the end of the tightening cycle was declared in January, the Turkish central bank was forced to lift the one-week repo rate from 45% to 50% despite local elections looming,” Bartosz Sawicki, a market analyst at Conotoxia, wrote in an emailed note.

Sawicki said the rate hikes since the May 2023 presidential elections “were not enough to quickly fix imbalances cultivated by years of irresponsible, unorthodox policies.”

The Turkish currency, which has lost some 40% of its value against the dollar in the past year, recovered some ground following Thursday’s decision.

→ Conflict In Israel Sends Gold Soaring ???? Here’s How To Get Your Share (From Colonial Metals) (Ad)

Where should you invest $1,000 right now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here