# Turkish political and economic developments

> Live situation record from CLSTR: https://clstr.news/situations/turkish-political-and-economic-developments
> Updated: 2026-08-31T05:00:00.000Z. Sources: 6. Developments: 2.

Turkey has experienced significant economic and political volatility driven by shifts in monetary policy and governance. Between 2021 and 2023, President Recep Tayyip Erdoğan implemented unconventional policies by lowering interest rates to combat inflation, a move that led to a 40 percent decline in the lira's value and increased dollarization. This period eventually required interest rates to be raised to 50 percent to address instability.

More recently, the Central Bank of the Republic of Türkiye has maintained a policy rate of 37 percent while resuming weekly repo auctions. While markets expect potential rate cuts later in the year, inflation remains a persistent concern. Parallel to these economic developments, political tensions have emerged regarding the Presidential Government System and potential alliances between the CHP and YENİ Parti, alongside legal proceedings involving Istanbul Mayor Ekrem İmamoğlu.

## Timeline

### 2026-08-31: Turkey's economic experiment under Erdoğan

Turkish President Erdoğan's decision to lower interest rates between 2021 and 2023 to combat inflation led to a 40 percent drop in the lira and forced a subsequent rise in rates to 50 percent.

2 sources. https://clstr.news/cluster/turkeys-economic-experiment-under-erdoan

### 2026-08-26: Turkey faces political shifts and central bank interest rate stability

Turkish politics face shifts as CHP and YENİ Parti consider alliances amid legal cases, while the Central Bank maintains interest rates at 37 percent amid inflation concerns.

4 sources. https://clstr.news/cluster/turkey-faces-political-shifts-and-central-bank-interest-rate-stability

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Cite as: Turkish political and economic developments. CLSTR, https://clstr.news/situations/turkish-political-and-economic-developments