The acceleration follows a series of interest rate cuts this year by the central bank that threaten to pile even more pressure on inflation
The acceleration - to a level last seen in mid-1998 -follows a series of interest rate cuts this year by the central bank that threaten to pile even more pressure on inflationTurkish inflation accelerated last month to a level last seen in mid-1998, fueled by an experimental central bank policy that has chased away foreign investors and eroded the lira’s value.
As a result, Turkey has the world’s deepest negative interest rates when adjusted for inflation, depriving it of a buffer to protect local assets against a sell-off. The lira has lost more than 50% of its value against the dollar in the past 12 months. But President Recep Tayyip Erdogan has insisted on even lower interest rates, saying they’ll help reduce inflation. It’s an argument that contradicts conventional economic theory — and which, so far, hasn’t been validated by real-world experience, least of all in Turkey. He has called for the benchmark rate to be cut to below 10% by year-end, from 12% currently.
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