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Türkiye's Central Bank Holds Rate at 50%, Warns on Inflation

People rest in a public park outdoors away from buildings following an earthquake in Malatya, southern Turkey, Wednesday, Oct. 16, 2024. (Burhan Karaduman/Dia Photo via AP)
People rest in a public park outdoors away from buildings following an earthquake in Malatya, southern Turkey, Wednesday, Oct. 16, 2024. (Burhan Karaduman/Dia Photo via AP)
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Türkiye's Central Bank Holds Rate at 50%, Warns on Inflation

People rest in a public park outdoors away from buildings following an earthquake in Malatya, southern Turkey, Wednesday, Oct. 16, 2024. (Burhan Karaduman/Dia Photo via AP)
People rest in a public park outdoors away from buildings following an earthquake in Malatya, southern Turkey, Wednesday, Oct. 16, 2024. (Burhan Karaduman/Dia Photo via AP)

Türkiye's central bank held interest rates at 50% on Thursday as expected but cautioned that recent data had lifted inflation uncertainty, in a hawkish signal ahead of an expected easing cycle in coming months.
"In September, the underlying trend of inflation posted a slight increase," the bank's policy committee said, adding: "the uncertainty regarding the pace of improvement in inflation has increased in light of incoming data."
According to Reuters, analysts said the message could reinforce the view that the bank will wait until around January to ease monetary policy, after a more than year-long effort to slay years of soaring inflation.
The last time the bank raised its main policy rate was in March, when it hiked by 500 basis points to round off an aggressive tightening cycle that started in June last year.
Since then, it has kept the one-week repo rate on hold. In a change of messaging last month, it began setting the stage for a rate cut by dropping a reference to potential further tightening.
Yet after monthly inflation was higher than expected at nearly 3% in September, a Reuters poll showed analysts expected the bank to wait until December or January to begin its anticipated easing cycle.
Nicholas Farr, economist at Capital Economics, said the bank signaled that the "slow pace of disinflation will prevent monetary easing this year.”
"It seems clear that the (central bank) – like us – doesn't think the conditions are in place for a monetary easing cycle to start very soon."
Annual inflation has dropped to 49.4% - below the policy rate for the first time in this cycle - from a peak of 75% in May.
The central bank is closely watching the monthly rate for signals of when to begin easing, though it has only dipped below 2% once this year, in June. It is also watching for high household inflation expectations to ease toward its targets.

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Growth of Non-Oil Sectors Position Saudi Arabia Among Leading Global Economies

 King Abdullah Port, Saudi Arabia (Asharq Al-Awsat)
 King Abdullah Port, Saudi Arabia (Asharq Al-Awsat)
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Growth of Non-Oil Sectors Position Saudi Arabia Among Leading Global Economies

 King Abdullah Port, Saudi Arabia (Asharq Al-Awsat)
 King Abdullah Port, Saudi Arabia (Asharq Al-Awsat)

Saudi Arabia’s economy continued its upward trajectory in 2024, solidifying its status as one of the world’s most stable and fastest-growing markets. This momentum is being driven by the Kingdom’s unwavering commitment to economic diversification — a central pillar of Vision 2030 — which has significantly boosted non-oil sectors, expanded private sector participation, and increased the economy’s ability to generate jobs and attract investment.

Non-oil activities now contribute a record 51% to real GDP, marking a major milestone in the country’s transformation journey.

According to the Vision 2030 annual report, Saudi Arabia’s real non-oil GDP grew by 3.9% in 2024 compared to the previous year, fueled by ongoing investments across diverse sectors. Non-oil activities alone expanded by 4.3% year-on-year, reflecting the success of structural reforms and strategic national programs.

At the heart of Vision 2030 is the ambition to build a thriving economy. One of the key benchmarks is improving Saudi Arabia’s position in global GDP rankings. In 2016, the Kingdom ranked 20th worldwide. By 2030, it aims to break into the top 15, with a targeted GDP of SAR 6.5 trillion ($1.7 trillion).

In early 2024, Saudi Arabia adopted a new moving-chain methodology to measure GDP more accurately. Under this updated system, real GDP has grown consistently since 2016 at a compound annual rate of 1.75%, excluding the pandemic-induced downturn in 2020. Non-oil GDP, meanwhile, has shown even stronger performance, expanding at a 3.01% annual pace over the same period.

While the 2024 non-oil GDP target was narrowly missed, the outcome reached 98% of the goal — a strong showing amid global uncertainties. Leading contributors included wholesale and retail trade, hospitality, transportation, logistics, and information technology.

Non-oil exports also played a pivotal role in economic growth, achieving over 75% of their annual targets. Gains came primarily from increased exports of non-oil goods and a sharp rise in re-exports, underlining Saudi Arabia’s growing role in global trade flows.

The private sector’s role in the economy has expanded significantly, with its contribution to GDP reaching 47% — surpassing the 2024 target. Since 2016, this contribution has grown at a compound annual rate of 1.94%.

This progress reflects ongoing efforts to reduce reliance on oil, empower private enterprise, and enhance the Kingdom’s global competitiveness. Key initiatives include national strategies aimed at unlocking sectoral potential, the Public Investment Fund’s push to stimulate private capital, and the successful drive to attract global companies to relocate their regional headquarters to Saudi Arabia.

The government continues to foster a dynamic business environment, supporting small and medium enterprises (SMEs) through regulatory reforms and major development projects. These efforts span several sectors, including manufacturing, transport, logistics, and foreign investment.

Global Confidence, Positive Outlook

International confidence in the Saudi economy remains strong. In 2024, the world’s top three credit rating agencies affirmed the Kingdom’s sovereign creditworthiness. Moody’s assigned a rating of “Aa3” with a stable outlook; Fitch rated it “A+” with a stable outlook; and S&P awarded an “A/A-1” rating, also with a stable outlook.

Global institutions are also optimistic about the Kingdom’s growth prospects. The Organisation for Economic Co-operation and Development (OECD) forecasts Saudi economic growth at 3.8% in 2025 and 3.6% in 2026 — well above the global average.