Turkey Commits to Continuing Monetary Tightening

The Central Bank of Turkey indicated today, Monday, that the country will continue to shift its monetary policy until inflation expectations significantly improve. The central bank stated in the minutes of the Monetary Policy Committee meeting for June, during which it was decided to raise the main interest rate by 650 basis points to 15 percent, "The monetary tightening process is expected to continue until a significant improvement in inflation expectations is achieved." The bank confirmed that this shift comes after a two-year period of monetary easing and is the first step in a process to curb inflation. Annual inflation approached 40 percent in May after reaching its highest level in 24 years, exceeding 85 percent in October of last year.