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Since this summer, Turkey has carried out a significant turnaround in its monetary policy: on Thursday September 21st, the central bank once again raised its main key rate by five points, now set at 30%, to try to stem rebounding inflation. This rate, capped at 8.5% in June, has now reached a level not seen since 2003.

This change bears the signature of the new economic team which took office after the re-election at the end of May of President Erdogan who announces further rate increases in the coming months “until a significant improvement in the inflation outlook” according to the Economy Minister. Inflation had accelerated to 58.9% year-on-year in August after falling to 38.2% in June.

This shift in economic and monetary policy, which began a few months ago, seems to please international institutions. At the beginning of September, the World Bank announced an USD 18 billion loan to Ankara, two thirds of which should be devoted to supporting the private sector. The Fitch rating agency raised its outlook on Turkey from “negative” to “stable” in early September, welcoming the return to a “more conventional and coherent policy”.

With the overhaul of monetary policy, Turkey is attracting more interest from foreign investors who are increasingly turning towards Turkish stocks and bonds. “In recent months, the country has witnessed a notable and positive change in the interest of international investors in Turkish capital markets” according to the Managing Director of HSBC Turkey. Interest is said to come mainly from the UK, Europe, the US and the Middle East. On September 19, Turkey also undertook a major investor tour, a series of meetings which began with the G20 countries meeting at a summit in India and which continued in Europe then in New York during the General Assembly of United Nations.