Overview

• Turkey's central bank has raised its key interest rate by 2.5 percentage points to 42.5% in an effort to combat high inflation, which rose to 61.98% last month.
• This is the seventh consecutive interest rate hike by the bank, taking borrowing costs from 8.5% to the current 42.5%.
• The bank has signaled that the tightening cycle could soon end, maintaining monetary tightness as long as needed to ensure sustained price stability.
• The series of rate hikes came after President Recep Tayyip Erdogan appointed a new economic team following his reelection in May, reversing his previous policy of cutting rates to fight inflation.
• Analysts predict that the central bank will likely complete its rate hikes next month at 45%, halting the tightening before the local elections in March.