The central bank in Turkey has raised its key interest rate by 250 basis points, taking it up to 45% as it tries to stop runaway inflation that is nearing an annualized 65%.
Inflation in Turkey rose 64.8% year-over-year in December 2023, up from 62% in November of last year.
The country’s Lira currency hit a record low against the U.S. dollar earlier in January, falling as low as 30 to the American currency for the very first time.
The interest rate hike is the latest in a series of increases by Turkey’s central bank. The country continues to struggle with a weak currency and skyrocketing consumer prices.
Economists blame the runaway inflation on the loose monetary policy of Turkey’s Ankara government.
The Lira currency is down 38% against the U.S. dollar so far in 2024 and has lost 80% of its value over the last five years.
The combination of high inflation and high interest rates has zapped the purchasing power of consumers in Turkey and pushed many people into poverty as a result.