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Turkey’s central bank raised interest rates to combat inflation

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Kathmandu. The Central Bank of Turkey (CBRT) has raised interest rates to combat inflation. The bank has maintained the one-week repurchase rate from 45 percent to 50 percent with effect from last Thursday.

CNBC mentioned that the Monetary Policy Committee has concluded that this is necessary to deal with the country’s inflation. Applying the reference interest rate of 50 percent, the committee has made it clear that the interest rate will be determined by the price increase in the coming months.

In the month of February, the monthly inflation was higher than expected, in which the service inflation is high’, CNBC wrote, quoting the topic stated in the statement issued by the committee, ‘Geopolitical risks and the increase in service and food prices have put pressure on the overall inflation.’

Turkey’s annual consumer inflation rate is 67 percent. The committee has made it clear that the interest rate will be increased further if necessary to prevent inflation.

“The strict monetary regime will be maintained until the rate of inflation is reduced,” the committee said. Exactly one year ago, Turkey’s reference interest rate was 8.5 percent.

Turkish President Recep Tayyip Erdogan has appointed Fatih Karahan as the Governor of the Central Bank. The new governor is expected to balance the inflation rate.

The Turkish currency, the lira, is weakening due to rising inflation. The lira has weakened by 40 percent against the dollar within a year.

In the last 5 years, the value of the lira has decreased by 82 percent compared to the dollar. It is being analyzed that if inflation is not controlled, the value of the lira may fall further.

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