Turkey inflation hits 83%; Erdogan vows to keep cutting rates

Exchange rates information at a currency exchange bureau in Istanbul, Turkey, in June. Inflation for the country of 84 million people has soared in the last two years, in particular as Turkish President Recep Tayyip Erdogan insists on continuing to cut interest rates rather than raise them — deviating from the conventional way of controlling inflation.

Erhan Demirtas | Bloomberg | Getty Images

Turkey’s inflation climbed to a new 24-year high of more than 83% for September, the country’s official body for statistics reported Monday.

Consumer prices month on month grew by 3.08%, and annually by 83.45%. The domestic producer price index was up 4.78% from the previous month, and up a whopping 151.5% year on year.

Inflation for the country of 84 million people has soared in the last two years, in particular as Turkish President Recep Tayyip Erdogan insists on continuing to cut interest rates rather than raise them — deviating from the conventional way of controlling inflation.

“My biggest battle is against interest. My biggest enemy is interest. We lowered the interest rate to 12%. Is that enough? It is not enough. This needs to come down further,” Erdogan said during an event in late September.

In the last two months alone, Turkey’s central bank — seen as under the control of Erdogan — cut rates by 200 basis points to 12%, shocking markets. The Turkish lira is currently trading at a record low of 18.56 to the dollar, and has lost roughly 28% of its value against the greenback this year.

Turkish officials say that their measures will bring inflation down in the coming months, but many economists disagree and expect consumer prices to rise and the lira to fall further into next year.

“With external financing conditions tightening, the risks remain firmly skewed to sharp and disorderly falls in the lira,” Liam Peach, a senior emerging markets economist at Capital Economics, wrote in a note after Turkey’s last rate cut on Sept. 22.

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