It is better late than never. Probably with this idea in mind, Turkey’s central bank has raised interest rates for the first time in years in an attempt to prop up the falling lira. Since 2014, precisely when Recep Tayyip Erdogan assumed power, the Turkish lira has been on a roller-coaster ride - mostly downhill, consistently ranking among the three most underperforming currencies. After a decade of puppet-like management, the Central Bank of the Republic of Turkey finally took a bold step by unexpectedly hiking the interest rate from 17.5% to 25%. The surprising move came after years of Erdogan's interference in monetary policy, and in particular, his unorthodox approach stating that low interest rates help tamper inflation. Despite economists sounding alarm, Erdogan had insisted on loosening monetary conditions until his political throne started to wobble in the recent election. Apparently, the threat of losing power inspired a fresh approach, and the Turkish leader finally invited a team of professionals responsible for developing a new financial strategy. Although there has been a positive shift in the policy, the results are not clear yet. Based on previous decisions, most analysts predicted a more modest rate hike to just 20%. They noted that a rapid rate increase could complicate business operations and put pressure on some population groups.
