Turkey’s Central Bank raises interest rates to 45%

Turkey’s Central Bank on Thursday hiked its key interest rate by a further 250 basis points, to 45%, as widely anticipated, but noted that also there would be a pause in hikes without specifying until when.

The hike is the latest in a series of such adjustments aimed at combating runaway inflation, which increased to 64.77% year on year in December.

“Taking into account the lagged impact of monetary tightening, the committee assesses that the monetary tightness required to establish the disinflation course is achieved and that this level will be maintained as long as needed,” the bank said in a statement after its monthly monetary policy committee meeting.

The pause in rising borrowing costs is likely linked to upcoming local elections in March in which Turkey’s president, Recep Tayyip Erdogan, is seeking to wrest back control of several critical cities, most notably the country’s largest city, Istanbul.