A 34% increase in the minimum wage for the second time this year, Turkey’s labor minister announced, a measure that increases inflationary pressures in the country, at a time when the new economic staff is committed to reducing inflation to single digits from 40 % where it is officially placed today.

The minimum wage will rise to 11,402 pounds ($483) this month, Labor Minister Vedat Isihan announced on television.

At the same time, Devlet Bakhceli, an ally of Turkish President Tayyip Erdogan, said that “painful” measures such as raising interest rates are necessary to stabilize the Turkish economy, while the central bank’s decision on the issue is expected on June 22.

“Our view on interest rates is known and has not changed. Raising interest rates is a policy choice that hurts production. But there are short-term and sometimes painful measures Turkey needs to take for economic stability,” said the leader of the Nationalist Action Party and a government coalition partner.

Tayyip Erdogan hinted last week that Turkey’s central bank is likely to raise the key interest rate to tackle inflation, despite his personal opposition to high interest rates.

Contrary to classical economic theories, Erdogan believes that high interest rates favor inflation, which, beyond the official rate of 40%, has exceeded 100%, according to independent economists.

Erdogan has in recent years forced the central bank to repeatedly cut the key interest rate, thereby contributing to the decline of the Turkish lira, which has lost more than 80% of its value against the dollar in the past five years.

But after his re-election, Erdogan hinted at the possibility of a return to more conventional policies, appointing former Merrill Lynch economist Mehmet Simsek as finance minister and a former Wall Street executive, Hafiz Gei Erkan, as head of the central bank.

Financial analysts believe that a strong increase in the key interest rate, which has been fixed at 8.5% since the end of February, can help the Turkish economy recover.