The monetary experiment continues Recep Tayyip Erdogan. The Central Bank of Turkey has surprised the markets once again with its decision to cut official interest rates despite the fact that inflation in the country has exceeded 80% and is devastating its economy. Its currency falls 1% this Thursday, to 18.2 lire for each euro.
Those responsible for the country’s monetary policy, under the control of the Erdogan government, announced a cut of 100 basis points, from 13% to 12%. In Augustthe Turkish inflation rate was recorded at 80.2%, accelerating for the fifteenth consecutive month and the highest level in 24 years. When it began to lower them last year, the IPC was barely growing at rates of 20% and now it has quadrupled twelve months later.
“The Weakening Effects of Geopolitical Risks on Global Economic Activity they continue to rise. Global growth forecasts for the coming period are being revised downwards and recession is increasingly being assessed as an unavoidable risk factor,” the central bank said in a statement. release this Thursday.
“Strong growth was seen in the first half of 2022. Since early July, leading indicators point to a slowdown in growth due to weakening external demand. Compared to peer economies, job creation has been stronger,” he adds.
The Bank of Turkey Committee waits for the “disinflation process to begin” thanks to the measures taken and resolutely implemented to strengthen financial and price stability together with the rsolution of the war in Ukraine after the invasion carried out on February 24 by Russia.
“The rising inflation is driven by the lagged and indirect effects of rising energy costs as a result of geopolitical events, the effects of price formations that are not supported by economic fundamentals, strong negative supply shocks caused by rising global energy, food and agricultural commodity prices,” argues.