The Turkish central bank will not raise or lower interest rates, despite the sky-high inflation in the country. Consumer prices in Turkey are 55 percent higher than a year ago.
In addition, the earthquakes that hit Turkey last month have made it difficult for the bank to decide.
Economists didn’t know how it would go because the central bank has often made the unconventional decision to cut interest rates to fight inflation. However, President Recep Tayyip Erdogan is convinced this will work, while central banks worldwide are raising interest rates to curb rising prices.
In addition, Erdogan also seems to be looking ahead to the Turkish presidential elections in May. The low-interest rates make it attractive for the Turks to take out cheap loans. According to Erdogan, this can then boost the economy.
More than 50,000 people were killed in the earthquakes in Turkey. The Turkish Ministry of Finance estimates the damage at around 104 billion dollars, the equivalent of more than 96 billion euros. The costs weigh heavily on the government’s finances, which is struggling with a large budget deficit.