The Central Bank of Turkey raised the discount rate by 500 basis points to 50%

The Monetary Policy Committee (MPC) has made its second interest rate decision under the leadership of new Chairman Fatih Karakhan. Contrary to market expectations, the Central Bank of Turkey has decided to raise the interest rate by 500 basis points to 50%.

Taking into account the deterioration of the inflation forecast, the Committee decided to raise the rate. The tight stance of monetary policy will be maintained until the underlying trend of monthly inflation decreases significantly and for a long time, and inflation expectations come closer to the forecasted range.

The Central Bank's management believes that a decisive course of monetary policy will lead to a decrease in the underlying trend of monthly inflation, and disinflation will be established in the second half of 2024 due to rebalancing domestic demand, a real strengthening of the Turkish lira and an improvement in inflation expectations. The Committee plans to bring inflation to the target level of 5% in the medium term.