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The Turkish central bank once again raised its main key rate by 5 points, to 50%, a decision justified by inflation at 67.1% over one year in February, above estimates. The central bank had raised its key rate from 8.5% to 45% between June 2023 and January 2024 in order to counter the surge in prices and plans further increases in the event of a “significant and lasting deterioration in inflation”. The latter being fueled by the fall of the Turkish lira, which lost more than 40% of its value over one year against the dollar.

The move comes as global rating agency Fitch Ratings upgraded Turkey's credit rating to B+ with an outlook changed from stable to positive. In its report, Fitch Ratings estimates that inflation at the end of the year could rise to 40% and could stand at 29% in 2025 thanks to credit and tight monetary policies.

Internationally, Turkey is keen to maintain its economic relations with its foreign partners. It is against this backdrop that Britain and Turkey announced they would launch negotiations on a new free trade agreement (FTA). London already had an FTA with Ankara that was renewed when Britain left the European Union in 2020, but a review by both sides last year concluded there was room for improvement.

In the same vein, Turkey and the Gulf Cooperation Council (GCC comprising Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain) reached an agreement to begin negotiations with a view to an FTA. If this agreement is successful, it could lead to the formation of one of the largest free trade zones in the world. In 2023, Turkey's trade with the GCC totaled USD 29.8 billion, marking a 41.9% increase from USD 21.0 billion recorded the previous year.