Turkey Central Bank Maintains 50% Interest Rate

Turkey's Central Bank has maintained its interest rate at 50% for the fifth consecutive month, aiming to combat persistent inflation, which stands at 62% year-on-year. The decision reflects a commitment to reduce inflation to an ambitious target of 38% by the end of December, despite market expectations suggesting it may reach 42%. The bank's recent monetary policies have shifted since last year's series of rate hikes, which were initiated to stabilize the economy and attract foreign investment. Economists warn that ongoing dollarization among Turkish citizens could hinder efforts to manage inflation and delay any potential rate cuts. As the economy shows signs of slowing, including declining manufacturing activity and rising unemployment, discussions about future rate reductions are expected to intensify. The Central Bank's aggressive targets for inflation, including a goal of 14% by 2025, are viewed as highly ambitious and critical to its monetary policy strategy.