Economist Hakan Kara: Interest Rates Hit 50 Percent, Natural Gas Prices Soar by 149 Percent
Sharp Energy Price Hikes Undermine Anti-Inflation Measures: Prominent Turkish economist and former Central Bank chief economist Prof. Dr. Hakan Kara has drawn attention to a major contradiction in Turkey’s current economic policy. While the Central Bank raised interest rates to 50% in March 2024 to curb inflation, natural gas prices have surged nearly 150% in the months that followed.
Natural Gas Prices Have Risen Drastically Since March 2024
Taking to social media, Kara pointed out that since the Central Bank’s rate hike in March, natural gas prices have increased by 149%. He emphasized that such a steep rise in energy costs stands in stark contrast to the government’s stated goal of fighting inflation, suggesting that these price adjustments may actually work against the broader economic stabilization strategy.
Tight Monetary Policy Launched Under Mehmet Şimşek
This economic backdrop stems from the monetary tightening policy implemented under Finance Minister Mehmet Şimşek, who took office in June 2023. Since then, the government has pursued a series of interest rate hikes aimed at slowing down inflation. By March 2024, the Central Bank raised its policy rate to 50%, where it has remained at a nominal level of 46% since.
Consumer Struggles Persist Despite High Interest Rates
However, despite this aggressive monetary policy, prices of essential goods—especially energy—continue to rise. Natural gas, being a critical household utility, is now significantly more expensive, further straining the budgets of Turkish consumers. The continued rise in living costs is undermining the intended effects of high interest rates, as households struggle with reduced purchasing power.
Policy Imbalance Raises Economic Concerns
Kara’s remarks highlight a growing concern among economists: that without coordinated fiscal and energy pricing policies, monetary tightening alone may not be sufficient to control inflation. While raising interest rates can cool off demand, skyrocketing costs in vital sectors like energy risk fueling inflation from another front—leaving consumers caught in the middle.
