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The decision comes after Turkish President Recep Tayyip Erdogan said earlier this week that the lira's depreciation has come to an end.

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Turkish Central Bank Gov. Hafize Gaye Erkan (C) attends the Planning and Budget Commission of the Turkish Grand National Assembly, Ankara, Turkey, Oct. 3, 2023. - Adem Altan/AFP via Getty Images

November 23, 2023

ANKARA — Turkey’s Central Bank hiked interest rates Thursday by another 500 basis points, from 35% to 40%, but vowed to slow the pace of its increases and complete ​​the tightening cycle ”in a short period of time.”

The bank cited continuing vigor of domestic demand and geopolitical risks in an apparent reference to the ongoing Israel-Hamas war for the decision.

“The existing level of domestic demand, the stickiness in services inflation and geopolitical risks keep inflation pressures alive,” the central bank said in a statement after its monthly monetary policy committee meeting.

Turkey - Figure 2
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The bank also vowed to slow the pace of the hikes. “The current level of monetary tightening is significantly close to the level required to establish the disinflation course. Accordingly, the pace of monetary tightening will slow down and the tightening cycle will be completed in a short period of time,” the statement read. “Monetary tightening will be maintained as long as needed to ensure sustained price stability.”

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