The most questioned rate policy
Although the cost of living in the country does not seem to find a ceiling in the last two years, the Ottoman president, Recep Tayyip Erdogan not only continues to refuse to raise interest ratesarguing that this measure will only harm Turkey’s economy, but rather proposes the opposite: lower them.
On October 20, Turkey’s central bank lowered its interest rate by 150 basis points from 12% to 10%. In total, in the last three months the central bank has cut rates by a total of 350 basis points and further cuts are not ruled out.
To the surprise of few, many economists and analysts affirm that Erdogan’s policies they do nothing but harm the Turkish lira and add more fuel to the fire of inflationwhile pointing out that the Ottoman president is promoting a currency crisis in the country.
Haluk Burumcekci, founder of Burumcekci Consulting, believes October’s data could be the headline inflation peak if the lira doesn’t weaken further. “We believe that headline inflation may have peaked, barring a depreciation from the current level of the lira. A significant decline could only occur towards the 70-75% range due to the base effect in the last month of the year”, explains this expert.
For his part, Liam Peach, senior emerging markets economist at Capital Economics, believes that “although he said he would cut more than 150 basis points in interest rates at his meeting this month, there is a risk of further easing beyond that, which would add further downward pressure on the lira”.
The lira drop by 44% last year and by 29% this year It has been the main reason for the increase in inflation, in addition to the increase in energy prices.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
