Economists Assess if Central Bank is Approaching End of Interest Rate Hikes

The Central Bank Increases Interest Rates; Economists Evaluate if it’s the End

In a recent decision, the Central Bank of Turkey has once again increased interest rates, raising the policy rate from 40 percent to 42.5 percent, marking a 250 basis point increase. The decision text emphasized the intention to complete monetary tightening steps as soon as possible.

Economists have weighed in on this increase and whether it signals an end to the cycle of interest rate hikes. Muhammet Bayram, an economist, stated that the interest rate hike was in line with market expectations and suggests that the Central Bank can now predict and sustain the current situation. He also mentioned that the Central Bank has indicated the end of monetary tightening, with future steps expected to be smaller.

Global developments were also highlighted by economists, with Yüksel Okşak pointing out that the interest rate cut by the Federal Reserve indicates that Turkey has completed its own interest rate cut cycle. This completion suggests that the country is experiencing low employment loss and recession, potentially resolving a soft landing early.

With these evaluations in mind, it remains to be seen if the recent interest rate increase is truly the end of a tightening cycle, or if further adjustments will be necessary in the future.

 

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