stockmarketwalk Turkish inflation continued to rise in September. The annual inflation climbed to 83.45%, which represents a 24-year record high.
Meanwhile, the Turkish president still considers high interest rates to be the root cause of economic suffering. Therefore, the interest rate cuts may continue in the future.
Instead of tackling the highest inflation in 24 years with interest rate hikes, the Bank of Turkey is driving Erdogan’s economic policy stimulus program to boost exports, investments and economic growth.
The lira collapsed amid central bank rate cuts in an unusual easing cycle, which were sought by President Recep Tayyip Erdogan as part of the fight against high interest rates. He also called for single-digit interest rates by the end of the year.
JP Morgan analysts said in a note that
Monetary policy decisions have become disconnected from macro fundamentals and have become almost irrelevant for short-term inflation dynamics
The rating agency Fitch said the negative outlook on country’s rating reflects the risks of focusing on growth despite the deteriorating environment. Fitch downgraded Turkey several times in last few years.
Due to the decline of the lira, the Turkish inflation has skyrocketed in the recent months. It depreciated more than 50% against the US dollar in the last two years.
USDTRY Rates by TradingView
USDTRY Rates by TradingView
USDTRY Rates by TradingView
Source: Reuters
