The dollar hit 17.67 Turkish lira at the time of the announcement Turkish Central Keeping the rate of interest at 14%.
The central bank did not raise its benchmark interest rate after a series of cuts in December 2021, leading to an economic crisis that undermined people’s living standards and complicated President Recep Tayyip Erdogan’s chances of victory in next year’s general election.
Erdoğan views the rise in interest rates as an increase in commodity prices, contrary to traditional economic theory.
The official annual rate of consumer price inflation in Turkey reached 78.6 percent, amid expectations that it will continue to rise and break records not repeated since the late nineties. Independent Turkish economists believe the real numbers could be higher, but Erdogan’s team believes inflation will ease early next year.
The central bank blamed elevated food and energy costs on tensions between Russia and the West over Russian military operations in the country. Ukraine.
Ratings agency Fitch warned last week that “Turkish government intervention in economic policies… is unpredictable.”
Turkey’s economic policies “not only fail to attract new capital inflows to finance the current account deficit and ease payment pressures, but may also damage confidence and create risks to the stability of deposits or external financing.”
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