The Turkish central bank is keeping its feet still on interest rates despite the highest rate of inflation in almost a quarter of a century. The monetary authorities left the key interest rate at 14 percent, as announced on Thursday. This means that the key rate has remained unchanged for the sixth month in a row, despite the ongoing surge in inflation.

In May, consumer prices shot up by 73.5 percent within a year. That’s the highest rate of inflation since 1998. According to opposition politicians, economists and polls, including consumers, inflation is even higher than official estimates.

The central bank had recently lowered the key interest rate by five percentage points towards the end of the year despite rising inflation. Behind this unorthodox monetary policy is President Recep Tayyip Erdogan, who describes himself as an “interest enemy”. Erdogan wants to heat up the economy with low interest rates. The Turkish government recently announced that inflation will fall as part of its new economic program.

Most economists expect the central bank to stick to its unorthodox monetary policy this year. No change in key interest rates is expected before the end of the year. One consequence of the unusual monetary policy is the sustained drop in the national currency, the lira. It lost around 44 percent of its value against the dollar in 2021, fueling inflation even further.