Turkey Gets Surprise Inflation Reprieve Ahead Of More Rate Hikes

Turkey has recently witnessed a surprise inflation. This has become a serious issue to tackle as this has also predominantly affected the hikes. As per the data the consumer prices rose 61.4% in October from last year. Turkey’s central bank has proceeded to hike interest rates by more than 25%. Mostly the economists had expected the bank to go up to 20% but the hike of 25% has shocked everyone. 

The central bank has stated that the recent indicators point to a continued increase in the underlying trend of inflation. They have also added onto the statement by mentioning that the monetary tightening will further be strengthened as much as needed but in a timely and a gradual manner until a significant improvement in the inflation outlook is achieved. They clearly said about how it is to anchor the inflation expectations and to control the deterioration in the pricing behaviour that is being witnessed. 

The inflation has clearly been falling since peaking at 85% in the month of October 2022 but jumped from 38% in June this year to 48% in July. The policy makers have expected the inflation to end this year at 65% and peak next may as high as 75%. Though as per Erkan mentioned that higher interest rates will be the centrepiece of her efforts to turn things completely around and change. Other policymakers, including the finance minister Mehmet Simsek, have commented that investors should focus on deposit rates relative to projected inflation. 

The central bank has increased the borrowing cost ever since the president Recep Tayyip Erdogan was re-elected in may. The bank’s monetary policy committee will increase the benchmark rate by 500 basis points . 

The conflict that has erupted between Israel and Hamas has worsened the inflationary situation in Turkey as it is a major energy importer. The central bank has simplified the rate caps on loans and exempted the import of investment goods from the net exporter requirement along with the objectives of providing companies access to export the loans. The bank has also made further adjustments in the required reserve in order to mop up liquidity in the whole banking system. So far it is expected the loss of momentum to continue over the coming period given tighter financial conditions which are more supportive of normalising of household consumption. The governor is taking the required steps so far and has cited a stronger demand for the lira as well.

Other news

Most Recent Blogs View All Blogs

08 Feb

Blockchain's Impact on Trade Finance: Shaping Global Commerce

Trade financing facilitates global commerce but involves antiquated systems reliant on manual paperw...

06 Feb

India's Trade Dynamics Amidst the Red Sea Crisis

As of now, there has been no significant impact on India's exports and imports owing to the crisis i...

31 Jan

Choosing the Right Trade Finance Instrument for Your Business

Understanding Trade FinanceTrade finance facilitates transactions and lowers risks for buyers and se...


Emerio Banque is an innovative global financial institution incorporated in England and Wales with Legal Entity Identifier 875500DGPPWAFABBK130. Emerio Banque does not offer its products and services to businesses and/or persons registered in the United Kingdom.

No information on this website should be construed as a solicitation, offer, recommendation, and representation of suitability or endorsement of any security, investment or strategy.

Important Notice

Emerio Banque would like to advise its customers to report any suspicions which they may have regarding the identity of any intermediary who promotes products or services offered by us or any intermediary bearing similar names. You should verify with Emerio Banque by calling our Customer Service Number on +44 203 059 7831 or emailing help@emeriobanque.com

Please also be aware of bogus SMS messages and voice message calls or fraudsters who impersonate the staff of Emerio Banque.

We have recently become aware of a number of entities with different names misrepresenting themselves as associates, partners or agents of Emerio Banque.

Please be informed that Emerio Banque is not associated with nor do we have any business connections or dealings with such institutions.

Emerio Banque takes all information regarding suspicious fraudulent activity very seriously. Please immediately inform us at compliance@emeriobanque.com if you suspect or are approached by persons misrepresenting or impersonating Emerio Banque and/or its officials. We will make investigations and will take legal action where necessary.