Turkish central bank cuts rates again despite high inflation
AP Nov 24, 2022 13 days ago
ANKARA, Turkey (AP) — Turkey’s central bank delivered another outsized interest rate cut Thursday despite inflation running at more than 85% and other countries moving the opposite way to ease the pain of soaring prices.
The central bank said its Monetary Policy Committee decided to lower the benchmark policy rate by 1.5 percentage points to 9%, following a series of similar jumbo cuts.
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The move is in line with President Recep Tayyip Erdogan’s unorthodox economic views that high borrowing costs cause high inflation, even though traditional economic thinking says raising interest rates help tame inflation.
Erdogan had called for a single-digit interest rate by the end of the year. He is counting on lower borrowing costs to propel the economy as Turkey gears up for presidential and parliamentary elections next June.
“Considering the increasing risks regarding global demand, the Committee evaluated that the current policy rate is adequate and decided to end the rate cut cycle that started in August,” it said in a statement.
Inflation hit a raging 85.51% in October, according to official statistics, making even basic necessities unaffordable for many. Independent researchers estimated, however, that actual price increases are much higher than the official figures.
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