Turkish President Recep Tayyip Erdogan was re-elected last month, and his administration is now charting a new route for economic policy.
Erdogan demonstrated his willingness to change course from his unconventional tactics by appointing former Wall Street banker Hafize Gaye Erkan to run the central bank and Mehmet Simsek to the position of leading the finance and treasury ministry.
The new cabinet’s moves are to tackle the crippling economic crisis, which has seen inflation rates soar and the lira plunging to record lows as the country battles a cost-of-living crisis and depleted foreign reserves.
Here are some of the new policies and the current state of Turkey’s economy:
Hiked interest rate marks U-turn
On Thursday, Turkey’s central bank hiked its key rate by 650 basis points to 15 percent, the first hike in the country since early 2021.
The central bank’s policy committee said the shift “will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved”.
It said it raised rates “in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behaviour”.
The move was a reversal of Erdogan’s policy, taking place after years of monetary easing in which the one-week repo rate had been cut to 8.5 percent from 19 percent in 2021.
Turkey’s annual inflation was just below 40 percent last month after it hit a 24-year high above 85 percent in October last year.
