Turkey Interest Rate2022 Data - 1990-2021 Historical - 2023 Forecast - Calendar

The Central Bank of Turkey unexpectedly cut its interest rate by 100bps to 12% in its September 2022 meeting, surprising markets that expected rates to remain steady at 13%, and stated that recession risks are inevitable. The move followed the also unexpected 100bps rate cut in August, adding to the 700bps in interest rates slashes since September of 2021. The decision to lower borrowing costs was made despite a plunging lira, soaring consumer prices, and an unbalanced current account. Inflation crossed 80% in August, the highest since 1998, largely due to surging costs of importing energy. Also, the lira has plunged over 45% since the start of the central bank’s rate-cutting cycle last year to reach record lows. The Board foresees that the disinflationary process will begin on the back of the measures taken to pursue financial stability.

The Central Bank of Turkey unexpectedly cut its interest rate by 100bps to 13% in its August 2022 meeting, surprising markets that expected rates to remain steady at 14%, and signaled that it would continue to promote the use of the lira in the Turkish economy. It was the first interest rate cut following seven consecutive decisions to hold the rate constant, adding to the 600bps in interest rates slashes since September of 2021. The decision to lower borrowing costs was made despite a plunging lira, soaring consumer prices, and an unbalanced current account. Inflation rose to 80% in July, the highest since 1998, largely due to surging costs of importing energy. The lira has plunged over 50% since the start of the central bank’s rate-cutting cycle last year. The Board foresees that the disinflationary process will begin with the resolution of military conflict in Ukraine and further measures to promote usage of the lira in Turkey.

The Central Bank of Turkey left its key one-week repo rate unchanged at 14% in its July 2022 meeting, as expected, and signaled that it will continue to implement measures to promote the liraization of the Turkish economy. It marks the seventh consecutive decision to hold rates constant after 500bps of interest rate slashes since August 2021. The central bank stated that the increase in observed inflation is due to rising energy costs due to geopolitical conflicts in Ukraine, strong negative supply shocks of food, and emphasized that the higher prices are not a result of economic fundamentals. Annual inflation in Turkey rose to 79% in June, the highest since 1998. The Board foresees that the disinflationary process will begin with the re-establishment of the global peace environment and the elimination of base effects in inflation. At the same time, policymakers revised growth projections downward and stated that the likelihood of a recession has increased.