The Impact of Tight Monetary Policies on Turkey’s Economy
Istanbul – June 12, 2025
Amid an inflationary crisis and economic volatility, the Turkish Industry and Business Association (TÜSİAD) stated in an official report that rising real interest rates have been effective in controlling soaring inflation in the country. However, the policy has also placed significant pressure on economic growth.
Inflation Tamed, but Economy More Fragile
The report noted:
“Although the policy of increasing real interest rates has reduced inflation expectations, it has also constrained the country’s economic growth by raising investment costs and dampening demand.”
Political Criticism Mounts Against Erdogan’s Government
Alongside this economic analysis, some opposition groups have accused President Recep Tayyip Erdoğan of suppressing independent economic institutions and undermining the central bank’s autonomy. Critics argue that unilateral monetary policy management has increased investor uncertainty rather than fostering stability.
Ongoing Challenges for Turkey’s Economy
While the Turkish government continues to emphasize tight monetary policies to curb double-digit inflation, many experts warn of the risks of recession and declining household purchasing power.
