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Erdogan’s Push for Low Rates Backfires as Borrowing Costs Soar

  • 10-year government bond yield climbed to record high this week
  • Investors demand higher rates as inflation accelerates
Recep Tayyip Erdogan

Recep Tayyip Erdogan

Photographer: Adem Altan/AFP/Getty Omages

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The cost of borrowing money in Turkey is surging, a sign that President Recep Tayyip Erdogan’s policy of driving down interest rates is starting to backfire.

Since the central bank began slashing rates in September, the yield on 10-year government bonds has climbed more than 7 percentage points, touching an all-time high of 24.9% on Wednesday. It stands at more than 10 percentage points above the bank’s benchmark repo, the biggest premium on record.