Turkey hikes interest rates in another sign of economic normalcy. But markets expected more

By ANDREW WILKS
Associated Press

ISTANBUL (AP) — Turkey’s central bank has raised its key interest rate in another sign of commitment to a traditional path of battling inflation. But the move Thursday still fell below expectations after critics blamed President Recep Tayyip Erdogan’s economic policies for inflaming a cost-of-living crisis. The 2.5 percentage point hike came a month after a 8.5% increase. That reversed more than a year of rate-cutting prompted by Erdogan. He believes lowering interest rates fights inflation, contradicting traditional economic theory that says the opposite. After his reelection in May, he raised hopes by appointing two internationally respected economists to be his finance minister and top central banker. But some analysts say the new interest rate hike “underwhelmed expectations.”