Turkey’s central bank hikes key interest rate again to 45% to battle inflation

ANKARA, Turkey (AP) — Turkey’s central bank has raised its key interest rate by another 2.5 percentage points. The move was the latest in a series of rate increases aimed at combating inflation that reached nearly 65% in December. The bank on Thursday brought its benchmark rate to 45%. Turkish President Recep Tayyip Erdogan has been a longtime proponent of an unconventional economic theory that cutting interest rates would fight inflation. That runs contrary to mainstream economic thinking, and he abandoned that policy after he was reelected in May. Borrowing costs have since increased from 8.5% to the current 45%.