Turkey hikes interest marking a dramatic economic U-turn by Erdogan

Turkey has hiked its main interest rate from 8.5% to 15%, reversing one of President Recep Tayyip Erdogan’s unorthodox economic policies.

The 6.5-point rise was far lower than economists were expecting, but it marked a major shift in policy by his new economic team brought in to tackle rampant inflation.

Turkey’s leader has until now insisted on keeping interest rates down.

Inflation is almost 40% and Turks are in the grip of a cost-of-living crisis.

The head of Turkey’s central bank, Hafize Gaye Erkan, 44, was only recruited from the US this month in the wake of Mr Erdogan’s re-election as president.

Her decision marks the first rise in interest rates since December 2020, after a turbulent period in which three central bank governors were fired in less than two years, as they sought to stick to orthodox economics.

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