Turkey’s central bank has boosted borrowing costs for the second time in as many months as the country intensifies its battle against inflation and gradually unwinds its low-rate policy that tipped its economy into crisis.
Policymakers raised the one-week repo rate by 2.5 percentage points to 17.5 per cent. Local businesses were anticipating an increase to 20 per cent, according to a poll by the central bank before Thursday’s decision.
The interest rate rise marks the latest sign of how Turkey is overhauling its economic policies after President Recep Tayyip Erdoğan was re-elected in May. New finance minister Mehmet Şimşek has vowed to restore “rational” policies after years of unorthodox measures pursued by Erdoğan, including an insistence on keeping rates low, fuelled runaway inflation and a huge trade deficit.