Economist Mustafa Sonmez:   Turkey’s central bank mulls giant interest rate hike up to 10% to fight inflation

One of the leadfing economists and Tv  personality Mustafa Sonmez reports an inside scoop from the halls of Central Bank of Turkey in his new al Monitor article. According to Sonmez, “Alarmed by resurging price increases, central bank officials reportedly believe that a rate hike of up to 10 percentage points is an inevitable part of monetary tightening to tackle inflation”.

Turkey’s central bank is considering a mammoth rate hike of up to 10 percentage points next week to step up the fight against a sticky inflation and boost Ankara’s economic credentials in the eyes of foreign investors, Al-Monitor has learned.

Standart Chartered:    Substantial rate hikes to continue in Türkiye

Sources close to the bank’s Monetary Policy Committee (PPK) told Al-Monitor that a possibly drastic hike at the committee’s Sept. 21 meeting stem from concerns over monthly consumer inflation topping 9% in July and August as well as other factors inhibiting efforts to rein in prices.

Barclay’s predicts “modest CB” rate hike,  higher dollar/TL

With a new economic leadership in charge since June, such a whopping increase would be seen as cementing a reversal from President Recep Tayyip Erdogan’s unorthodox policies of the past several years, largely blamed for Turkey’s current economic woes. The central bank already delivered a bigger-than-expected hike of 750 basis points in August, bringing its benchmark one-week repo rate to 25%. Whether Erdogan — a self-declared “enemy of interest rates” — and his inner circle will approve of another massive hike remains unknown, but the PPK’s new members, who were appointed as part of Erdogan’s overhaul in the country’s economy management after his reelection, are inclined to raise it by up to 10 percentage points and follow up with other monetary-tightening measures, the sources said.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.