Turkey’s central bank keeps rate steady amid high inflation

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. erode / ɪˈroʊd / (v.) – to slowly decrease or reduce the value of something

    The negative issues about the singer have eroded her popularity.

  2. purchasing power / ˈpɜr ʧə sɪŋ ˈpaʊ ər / (n.) – the ability of people to pay for goods or services based on how much money they have

    Reducing income tax can increase the purchasing power of the citizens because they will have more money to spend.

  3. contradict / ˌkɒn trəˈdɪkt / (v.) – to say the opposite of a statement

    Your story contradicts hers. She said she stayed at home yesterday, but you said you saw her at the mall.

  4. aggravate / ˈæg rəˌveɪt / (v.) – to make a bad situation or condition worse

    Self-medication may aggravate your sickness. You should consult a doctor before taking any medicine.

  5. eye-watering / aɪ ˈwɔ tər ɪŋ / (adj.) – describing an amount or size that’s surprising because it’s much higher or larger than expected

    Our electric bills in the summer are eye-watering because we use the air conditioner a lot.


Read the text below.

Turkey’s central bank on Thursday kept its main interest rate unchanged for a fourth month even as surging inflation has hit a 20-year high and eroded people’s purchasing power.

In a statement following a monetary policy committee meeting, the bank said it was keeping its policy rate “constant” at 14%.

The decision was in line with President Recep Tayyip Erdogan’s opposition to high borrowing costs in a bid to boost growth, investment and exports. The Turkish leader insists that raising interest rates cause inflation — a position that contradicts established economic thinking. 

Turkey’s central bank has cut rates by 5 percentage points since September despite high inflation, then has paused them since January. The series of rate cuts last year triggered a currency crisis and rising consumer prices that have been aggravated by Russia’s invasion of Ukraine and soaring energy costs.

Yearly inflation hit 61.14% in March, deepening the squeeze on households that were already struggling to purchase basic goods. The Turkish lira lost 44% of its value against the U.S. dollar last year.

In an effort to soften the blow on households, the government has implemented tax cuts on basic goods and has adjusted electricity tariffs.

In comparison, the United States, United Kingdom and the 19 countries that use the euro currency have seen decades-high levels of inflation — 8.5%, 7% and 7.5%, respectively — but are nowhere close to Turkey’s eye-watering rate. Central banks in the U.S. and U.K. have raised interest rates to combat inflation.

This article was provided by The Associated Press.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Do you think the government should strictly control the prices of goods during an economic crisis? Why or why not? Discuss.
  • Aside from receiving help through government efforts, what else can be done by affected households to survive or keep up with inflation (ex. build an emergency fund, buy products from cheaper brands)? Discuss.

Discussion B

  • If your country starts experiencing very high inflation, would you consider migrating to a country where your money would have a higher value? Why or why not? Discuss. 
  • Do you think it’s the responsibility of companies to raise their employees’ wages when the prices of goods soar? Discuss.