ISTANBUL (AP) — Turkey’s central bank raised its key interest rate by 3.5 percentage points on Thursday, halting a three‑month easing streak as it confronts stubborn inflation, financial turbulence following the arrest of Istanbul’s mayor and aftershocks of global tariffs.
The Monetary Policy Committee lifted the benchmark one‑week repo rate to 46% from 42.5% and pushed the overnight lending and borrowing rates to 49% and 44.5%, respectively.
The committee said the “tight monetary policy stance will be maintained until a permanent decrease in inflation and price stability are achieved.”
“The main trend in inflation declined in March,” the committee noted, but warned that core goods inflation is likely to rise slightly in April “due to developments in financial markets,” while services inflation should remain flat.
It added that growing protectionism in global trade, referring to the aftermath of global retaliatory tariffs, could undercut Turkey’s disinflation path by affecting commodity prices and capital flows.
Iris Cibre, a financial markets expert, called the decision “very positive” for the bank’s credibility, which experts criticized in the past for being open to political interventions in its decision making.
“There were some comments that such a thing would not be allowed politically. The Central Bank has refuted these comments. This is very positive in terms of the credibility of the Central Bank.”
Cibre said the hike showed policymakers can act “more freely politically,” even though Turkey’s President Recep Tayyip Erdogan has long favored lower borrowing costs. “We all know that politics is in favor of lowering interest rates,” she said but warned of further financial risks due to limited credits,
“There is a 2% credit growth limit. So, it will continue to create serious problems for companies. This will increase unemployment, and it seems like the economy will slow down for longer than expected.”
Cibre noted that U.S. Federal Reserve officials have hinted they will wait to see the full impact of recently announced retaliatory tariffs between the U.S and other countries before adjusting rates. “That’s exactly what our Central Bank emphasizes,” she said.
High inflation in Turkey has been attributed to a combination of factors, including rising energy prices, the economic fallout from the COVID-19 pandemic, and Erdogan’s past unconventional economic policy of lowering interest rates despite soaring inflation.
Erdogan has long argued that high interest rates cause inflation — a theory that runs against mainstream economic theory.
In 2023, Erdogan appointed a new economic team, signaling a shift away from his previous unorthodox policies. The team initially implemented a series of interest rate hikes to combat inflation. After maintaining the interest rate at 50% for several months, the bank had embarked on a gradual cycle of rate cuts until today.
This story corrects credit growth limit cited by Cibre to 2%.
Workers deliver goods to a shop at Eminonu commercial district in Istanbul, Turkey, Thursday, April 17, 2025. (AP Photo/Francisco Seco)
A man pulls a trolley with goods at Eminonu commercial district in Istanbul, Turkey, Thursday, April 17, 2025. (AP Photo/Francisco Seco)
People carry goods at Eminonu commercial district, in Istanbul, Turkey, Thursday, April 17, 2025. (AP Photo/Francisco Seco)
President Vladimir Putin visited Russia's Kursk region for the first time since Moscow claimed that it drove Ukrainian forces out of the area last month, the Kremlin said Wednesday.
Putin visited the region bordering Ukraine the previous day, according to the Kremlin.
Ukrainian forces made a surprise incursion into Kursk in August 2024 in one of its biggest battlefield successes in the more than three-year war. The incursion was the first time Russian territory was occupied by an invader since World War II and dealt a humiliating blow to the Kremlin.
Since the end of 2023, Russia has mostly had the advantage on the battlefield, with the exception of Kursk.
Ukraine, the U.S. and South Korea said that North Korea sent up to 12,000 troops to help the Russian army take back control of Kursk, and Russia said on April 26 that its forces had pushed out the Ukrainian army. Kyiv officials denied the claim.
Putin’s unannounced visit appeared to be an effort to show Russia is in control of the conflict — even though its full-scale invasion of its neighbor has been slow and costly in terms of casualties and equipment — amid recent U.S. and European proposals for a ceasefire that Putin has effectively rejected.
Video broadcast by Russian state media showed that Putin visited Kursk Nuclear Power Plant-2, which is still under construction, and met with selected volunteers behind closed doors.
Many of the volunteers wore clothes emblazoned with the Russian flag and the Latin letters “Z” and “V”, which are symbols of Russia’s invasion of Ukraine.
“What you are doing now during this difficult situation for this region, for this area, and for the country, will remain with you for the rest of your life as, perhaps, the most meaningful thing with which you were ever involved,” Putin said as he drank tea with the volunteers.
Ukraine's surprise thrust into Kursk and its ability to hold land there was a logistical feat, carried out in secrecy, that countered months of gloomy news from the front about Ukrainian forces being pushed backward by the bigger Russian army.
Kyiv's strategy aimed to show that Russia has weaknesses and that the war isn't lost. It also sought to distract Russian forces from their onslaught in the eastern Donetsk region of Ukraine.
The move was fraught with risk. Analysts noted that it could backfire and open a door for Russian advances in Ukraine by further stretching Ukrainian forces that are short-handed along the roughly 1,000-kilometer (620-mile) front line.
The incursion didn’t significantly change the dynamics of the war.
Putin told acting Gov. Alexander Khinshtein that the Kremlin supported the idea of continuing monthly payments to displaced families that still couldn't return to their homes.
Putin said that he would back a proposal to build a museum in the region to celebrate what acting Gov. Alexander Khinshtein described as “the heroism of our defenders and the heroism of the region’s residents.”
Disgruntled residents had previously shown their disapproval over a lack of compensation in rare organized protests.
Russia’s Ministry of Defense said that its air defenses shot down 159 Ukrainian drones across the country overnight, including 53 over the Oryol region and 51 over the Bryansk region.
In Ukraine, Russian drone attacks killed two people and wounded five others in the northern Sumy region, the regional administration said.
In the Kyiv region, four members of a family were injured when debris from a downed drone hit their home, according to the regional administration.
Russia launched 76 Shahed and decoy drones overnight at Ukraine, the Ukrainian air force said.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
In this photo released by the Russian Presidential Press Service on Wednesday, May 21, 2025, Russian President Vladimir Putin, 2nd left, attends a meeting with volunteers at Kursk region, Russia. (Russian Presidential Press Service via AP)
In this photo released by the Russian Presidential Press Service on Wednesday, May 21, 2025, Russian President Vladimir Putin, center, speaks with volunteers at Kursk region, Russia. (Russian Presidential Press Service via AP)
In this photo taken from video distributed by Russian Defense Ministry Press Service on Wednesday, May 21, 2025, Russian servicemen attend a combat training for assault units in an undisclosed location in Ukraine. (Russian Defense Ministry Press Service via AP)
