New increase in the interest rate in Turkey

New increase in the interest rate in Turkey

increase in the interest rate in Turkey


The Central Bank of Turkey decided to approve a new increase in the interest rate to reach 17.5% after the first increase approved last June, estimated at 15%.


The interest rate hike by 250 basis points came below expectations according to economists, who had been waiting for an increase of at least 5% to bring the interest rate to 20%.


The Turkish central bank said that it will continue to tighten the country's monetary and fiscal policy, but slowly to get out of the inflation cycle and to reach price stability.


It should be noted that the decision to raise the interest rate coincided with increases in taxes on goods and services by about 2% in various categories, as well as an increase in corporate tax to 25% instead of 20%.


The base salary also increased from 8,500 Turkish Liras to 11,440 Turkish Liras, in addition to approving the minimum salaries of government employees at 22 thousand Turkish Liras, equivalent to 1,100 dollars per month.


On the other hand, the Turkish authorities have announced important economic reforms to support the interest rate hike, including the maintenance rate of securities that Turkish banks must allocate to their hard currency deposits has been reduced to five from ten percent.


According to the central bank, the process of simplifying securities maintenance regulations in Turkey will continue gradually in line with the goals of increasing the effectiveness of market mechanisms after the decision to raise the interest rate to 17.5 %.


It is expected that the Turkish monetary policy officials will continue to gradually raise the interest rate to achieve the goals set to get rid of the economic hardship experienced by the country.


The interest rate is expected to reach 30% by the end of this year to undermine inflation and achieve the economic stability that Turkey aspires to.


What a real estate in Turkey benefits from raising interest


The best luck for foreign investors will be from the interest rate hike step, as it is expected that the demand for bank loans directed to the purchase of real estate by Turks will decrease, which means that the real estate market is more broadly oriented towards foreigners wishing to own property.


The real estate market in Turkey has known offering attractive offers to foreigners at competitive prices, which increases the opportunities for foreign ownership and investment.


It should be noted that the Turkish government attached the decisions to raise the interest rate last June with new ownership facilities, represented by transferring the functions of transferring ownership of real estate to notary departments, i.e., notaries instead of Directorate queues the title deed.


Also, foreigners visiting Turkey can complete their real estate ownership transactions even on weekends, as the property transfer service and registration of sales and purchases remain continuous.