Daily Times

Turkey’s central bank sharply lifted its policy rate for the fifth month running on Thursday as part of its politically charged battle against historically high inflation rates.

The bank said it was taking its main lending rate to 35 percent from 30 percent because “inflation readings were above expectations” over the past three months.

Its statement also retained a pledge to raise rates further “in a timely and gradual manner” until “a significant improvement in the inflation outlook” is achieved.

Turkey’s official annual inflation rate peaked at 85 percent last October and climbed back up above 60 percent last month.

The bank has now more than quadrupled borrowing costs since President Recep Tayyip Erdogan dropped — or at least put aside — his lifelong objection to the idea that raising interest rates helps fight inflation.

The Turkish leader had entered a difficult May election pledging to never allow the bank to raise its key rate while he was president.

He reversed course after winning the vote and allowing a new team of Wall Street-trained economists to take on the job of steering Turkey out its worst cost-of-living crisis of Erdogan’s two-decade rule.

Erdogan has given his new policy team several crucial votes of support in the past few months.

He told his ruling party faithful on Wednesday that Turkey was waging a “multifaceted fight against inflation”.

“It takes time to see the steps taken in the economy reflect on people’s daily lives,” he said in televised remarks.