December 10, 2022
Turkey’s inflation reached 83%;  Erdogan vows to continue cutting rates

Information on exchange rates in June at the currency exchange bureaus in Istanbul, Turkey. Inflation has soared for the country of 84 million people over the past two years, especially as Turkish President Recep Tayyip Erdogan insisted on continuing to cut interest rates rather than deviating from the traditional way of controlling inflation.

Erhan Demirtas | Bloomberg | Getty Images

Turkey’s inflation has risen to a 24-year high of 83% for September, the country’s official body for statistics reported on Monday.

Consumer prices increased by 3.08% month-on-month and 83.45% year-on-year. The domestic producer price index was up 4.78% over the previous month and up 151.5% year-on-year.

Inflation has soared for the country of 84 million people over the past two years, especially as Turkish President Recep Tayyip Erdogan insisted on continuing to cut interest rates rather than deviating from the traditional way of controlling inflation.

During an event in late September, Erdogan said, “My biggest fight is against interest. My worst enemy is interest. We have reduced the interest rate to 12%. Is that enough? It’s not enough.” It needs to come down further.”

In the past two months alone, Turkey’s central bank – which was seen to be under Erdogan’s control – slashed markets by a shocking 200 basis points to 12%. The Turkish lira is currently trading at a record low of 18.56 against the dollar, and has lost nearly 28% of its value against the greenback this year.

Turkish officials say their measures will ease inflation in the coming months, but many economists disagree and expect consumer prices to rise and the lira to fall further next year.

“With external financing conditions tightening, risks remain strongly skewed and the lira disproportionately,” Liam Pe, a senior emerging market economist at Capital Economics, wrote in a note after Turkey’s last rate cut on 22 September. falls.”

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