Economists believe that raising interest rates is the appropriate antidote to high inflation.
(Photo: Reuters)
Istanbul The Turkish central bank lowered the key interest rate despite high inflation. The central bank in Ankara announced on Thursday that the value would be reduced from 14 to 13 percent. Turkish President Recep Tayyip Erdogan had already announced such a move in recent weeks.
Turkey is struggling with an economic crisis and high inflation. In July, consumer prices were 79.6 percent higher than in the same month last year. Unlike many other central banks, however, the Turkish central bank is not counteracting the development with interest rate hikes. Experts cite political pressure as the reason.
Inflation in Turkey is driven by several factors. The weak national currency, the lira, has been driving up prices for a long time since it makes goods imported into Turkey more expensive due to the exchange rate. In addition, there are problems in the international supply chains that make preliminary products more expensive. In addition, the prices of energy and raw materials are rising, mainly because of the Russian war against Ukraine.
Turkish lira slips after surprise rate cut The dollar appreciated by around one percent to 18.13 lira. The lira is thus less than two percent above its record low reached in December.
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The central bank had left interest rates unchanged since December after a repeated cut triggered a significant slide in prices.
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