Turkey's central bank hikes key interest rate again to 45% to battle inflation

Turkey’s central bank has raised its key interest rate by another 2.5 percentage points

ANKARA, Turkey -- Turkey’s central bank raised its key interest rate by another 2.5 percentage points on Thursday, pressing ahead with a series of hikes aimed at combating inflation that reached nearly 65% in December.

The bank brought its benchmark rate to 45%. It's the eighth interest rate hike since President Recep Tayyip Erdogan has abandoned his unconventional economic policies that economists say helped trigger a currency crisis and drove up the cost of living. Many households were left struggling to afford basic goods.

Erdogan is a longtime proponent of an unorthodox policy of cutting interest rates to fight inflation, which runs contrary to mainstream economic thinking.

In contrast, central banks around the world raised interest rates rapidly to target spikes in consumer prices tied to the rebound from the COVID-19 pandemic and then Russia’s war in Ukraine.

The European Central Bank is expected to keep its record-high benchmark rate steady at its meeting Thursday, following a rapid series of hikes over more than a year.