Turkiye's central bank sharply raises interest rates. That could signal an economic turnaround

The Turkish central bank has delivered a large interest rate increase, signalling a shift toward more conventional economic policies to counter sky-high inflation.

The bank on Thursday raised its key rate by 6.5 percentage points, boosting it to 15 per cent.

The increase — a significant jump from the current 8.5 per cent — is the first since March 2021 and comes after President Recep Tayyip Erdogan appointed two internationally respected officials to head the bank and the finance ministry.

The rate hike is an indication that the country is moving away from Erdogan's unorthodox belief that lowering interest rates fights inflation.

Traditional economy theory says just the opposite, and central banks around the world have been rapidly raising rates to combat spikes in consumer prices.

Many have blamed Erdogan's approach for a worsening cost-of-living crisis.