Turkey's Central Bank

Turkey's central bank held interest rates steady at 50% for a fifth straight month on Tuesday, as expected, and repeated that it remains vigilant to inflation risks even as it expects disinflation to gain pace.

Turkey's official statistics reveal that annual inflation surged to 75.45% in May 2024, marking the highest level since November 2022 and surpassing market forecasts of a 74.8% increase, up from 69.8% the previous month.

Monthly consumer prices rose by 3.37% in May compared to March, slightly higher than the 3.31% increase recorded in the previous month.

Since an economic overhaul in June last year, Turkey's central bank has increased its main interest rate to 50 per cent from 8.5 per cent in an effort to tame rampant inflation. Despite this, and other steps, Turks continue to face nearly 70 per cent inflation rates, high borrowing costs and cuts in measures that in recent years helped soften the impact of rising prices.

Turkey's central bank finds itself grappling with the country's persistent inflationary turmoil, projecting that the crisis will culminate in May with rates skyrocketing to approximately 75-76%.

Credit ratings agency S&P on Friday upgraded Turkey's ratings to "B+" from "B", saying that the coordination between monetary, fiscal, and income policy is set to improve, amid external rebalancing.

The credit action comes a week after the Turkish central bank kept its policy rate unchanged at 50%.

Turkey's central bank posted a 2023 loss of 818.2 billion lira ($25.25 billion), showed its balance sheet published in the Official Gazette on Sunday, on the back of steep loss stemming from the "KKM" foreign exchange-protected deposit scheme.

Inflation in Turkey soared to a staggering 68.5% year-on-year in March, according to data released by the Turkish Statistical Institute Turkstat. This alarming surge in prices has intensified concerns over the country's economic stability.

Turkey's central bank unexpectedly raised interest rates by 500 basis points to 50% on Thursday, citing a deteriorating inflation outlook and pledged to tighten further if significant and persistent deterioration in inflation is foreseen.

Turkey's central bank on Saturday raised the maximum interest rate on credit card cash withdrawals to 5% from 4.42%, according to a decision published in the Official Gazette, in a move aimed at additional tightening.

Turkey's central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation.

The central bank said it was keeping the benchmark one-week repo rate on hold, according to a statement. It was the bank's first interest rate decision under its newly appointed governor, Fatih Karahan.