Turkish think tank advises keeping rates at 37% amid investment fund turmoil
The Economic Policy Research Foundation of Turkey (TEPAV) recommends that the central bank maintain its policy rate at 37% because the recent fund crisis has shaken confidence and threatens banks and firms.
In a policy note released on Tuesday, the Economic Policy Research Foundation of Turkey (TEPAV) called on the central bank to keep its benchmark interest rate at 37% after a wave of investment fund failures eroded market confidence. The group said that, absent the crisis, a reduction of two percentage points would have been possible, but the liquidation of 131 funds by the Capital Markets Board has left 455,758 investors exposed and many funds still being wound down.
TEPAV warned that the turmoil could generate unpaid bank loans, cash shortages for companies, and broader financial instability, and it asked the central bank to coordinate with the government’s financial stability committee when setting rates. The recommendation follows the resignation of SPK Chairman Mahmut Sütçü and an MSCI decision to freeze changes to Turkish stock indexes, both of which add to economic uncertainty. The assessment also highlighted persistent high inflation, a mismatch between government and central bank inflation targets, and called for tax reform, curbing the informal economy, and stronger legal safeguards against political interference in monetary institutions.
Why it matters
The recommendation could shape Turkey's monetary policy at a time of financial stress and high inflation.
How the sides frame it
LOW AGREEMENTLeft-leaning coverage emphasizes a think-tank’s warning that fund failures demand keeping interest rates at 37% to avoid financial instability, while right-leaning coverage highlights household confidence in the lira and the economy’s ability to absorb shocks under tight policies.
LEFT
The coverage frames the story as a call for the central bank to maintain a high benchmark rate because fund turmoil threatens stability.
RIGHT
The coverage frames the story as evidence of public confidence and economic resilience, supporting continued tight monetary and wage policies.
The left emphasises
- TEPAV advises keeping the benchmark rate at 37% amid investment-fund failures
- Fund liquidations have left hundreds of thousands of investors exposed
- The turmoil could cause unpaid bank loans, cash shortages and broader instability
The right emphasises
- Turkish households keep faith in the lira, keeping foreign-currency deposits flat
- Resilience helps restore foreign-exchange reserves despite fund liquidations
- Economy can absorb energy-price shock if tight monetary and wage policies continue
In this story
