If it wasn’t already clear enough that Erdogan doesn’t believe in basic economic theory that inflation can be controlled by interest rates, Turkey’s President has let us know once again that he will never defend higher interest rates and that he will never compromise on this issue.
Its central bank, which suffers from a lack of independence, has cut its main interest rate three months in a row, despite eyewatering inflation levels of nearly 20%. The country’s inflationary backdrop combined with loosening monetary policy is sharply increasing the risk of hyperinflation, a phenomenon that is deeply troublesome for living standards by destroying the purchasing power of money.
The Turkish lira has gained in just one session out of the last eight against the US dollar and is trading close to record lows, reflecting the painful inflationary picture. USDTRY continues its upward ascent, pushing higher by more than 2% today,…
