Thu. Sep 28th, 2023


The Real News Network

Turkish lira collapses with Erdogan’s economy in freefall after major U-turn

2 min read

The Turkish lira has sunk to a new low just a day after the country nearly doubled its main interest rate, reversing one of President Recep Tayyip Erdogan’s unorthodox economic policies. Experts have warned that they expect the lira to “continue tanking” as the country catches up on the decision to raise interest rates.

Newly appointed Governor of the central bank Hafize Gaye Erkan hinted at more hikes until the inflation situation in the country improves.


The Turkish lira has been in freefall since the re-election of Mr Erdogan but officials appear wedded to further “monetary tightening”. 

Goldman Sachs said the approach looked in keeping with Turkey’s “unorthodox” approach to economic policy. 

Steve Hanke, professor of applied economics at Johns Hopkins University, said the central bank’s decision was “a little bit behind the curve”. 

He said: “[The lira] is tanking big time and probably will continue to do so as they attempt to play catch up.”

But Governor Hafize Gaye Erkan, appointed immediately after the election of Mr Erdogan, said this trend of rising interest rates would continue. 

He said: “Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved.” 

According to government statistics, the country’s annual inflation rate for May stood at 39.59 percent. Last October saw Turkey’s inflation rate soar to 85.51 percent.

Raising interest rates is seen as a means of bringing inflation down.


We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Source: Read Full Article