Part 4/8:

Interest Rates and Inflation Management

The relationship between inflation and interest rates has historically been complex in Turkey. President Erdoğan had previously favored reducing interest rates despite high inflation. However, since being reelected in June 2024, there have been nine consecutive interest rate hikes, raising the rate from 8.5% to 50%. This shift is expected to help curb inflation further, yet the high interest rates deter companies from taking on debt, severely stifling investment activity.

Recent data indicates that interest rates have surpassed inflation rates for the first time, potentially signaling an environment conducive to economic stability. However, the current interest rate of 50% remains prohibitively high for businesses and individuals.