Turkiye’s Central Bank releases May interest rates
Turkiye’s Central Bank (TCMB) will release its interest rate decision for May today.
Ankara has long grappled with a weakening national currency—the Turkish lira— against the US dollar. The weakening was exacerbated by the ruling Justice and Development Party’s unorthodox economic policies, which focused on keeping interest rates low for a long period. Last month, the TCMB kept is interest rate stable at 50% despite soaring inflation levels and a relative slow-down in economic activity. Analysts indicate that the rate decision for May will likely remain unchanged.
Expect the TCMB to bring the interest rate to 45% during the fourth quarter of this year. Under the new economic program spearheaded by the Finance Minister Mehmet Simsek, Ankara aims to continue its policy of attracting foreign investment in order to use the cash flow to reduce government debt. However, this trend will have little to no impact on the consumer price index and average citizens are likely to continue to struggle to afford daily expenses. Despite a steady growth in economic activity, expect Ankara’s inflation levels to continue to increase during the short-to medium-term.
