Turkey’s central bank has raised its key interest rate by 500 basis points to 40%, which was double the increase expected by economists.
The latest rate hike is an effort by Turkey’s central bank to lower runaway inflation that saw consumer prices in the country rise 61% in October from a year earlier.
The Turkish central bank’s decision to raise interest rates to 40% comes after a series of interest rate increases that have been financially painful for Turkey’s citizens.
Turkey has for years struggled with skyrocketing inflation and a weakened currency due to loose monetary policy that has been enforced by the country’s government.
In recent years, Turkey’s government has removed central bank governors who have raised interest rates to try and lower inflation. But now, the government appears to be taking inflation seriously.
The lira, Turkey’s currency, has fallen 35% against the U.S. dollar this year and has lost more than 80% of its value over the last five years.