In Ankara. Inflation is a dilemma that worries the Turkish government in the midst of a decline in the purchasing power of the citizen and the high deficit and a period before organizing the legislative and presidential elections in June 2023 and despite criticism of economic experts from President Recep Tayyip Erdogan’s plan to reduce interest.
Official data published today, Thursday, showed that inflation in Turkey rose in October on an annual basis to the highest level in 24 years at 85.
After the central bank cut the interest rate three times in three months despite the high prices, 51 percent, which is little less than expected.
Since last year, inflation has increased as the value of the lira has decreased as a result of the central bank starting to lower its main interest rate in a facilitation strategy that President Erdogan has always favoured.
The central bank decreased the main interest rate to 10.5% during the previous three months by a total of 350 basis points.
In contrast to the worldwide trend of tightening monetary policy, a commitment to make another reduction this month as the last step in the current facilitation course.
According to the Turkish Statistical Institute, monthly consumer price increases were 3.54 percent compared to poll respondents’ predictions of 3.60 percent. Inflation was expected to rise in consumer prices on an annual basis of 85. 60 percent.
Local producer prices increased by 7.
83 percent on a monthly basis and 157.69 percent annually in October.
In order to promote growth, manufacturing, and exports, the Turkish president advocates for lowering interest rates. The Ukrainian war and the rise in energy prices from the decrease in the value of the lira, however, had an impact on many international developments and caused the Turkish lira to lose value against the dollar, raising concerns about a further decline.
Many Turks were forced to live below the official poverty threshold as a result of the currency crisis, and the exorbitant pricing in every industry sparked outrage. Since the central bank started lowering interest rates, the Turks have seen an increase in their earnings.
It is obvious that inflation will have a negative impact on Erdogan’s chances and those of the Justice and Development Party in the next legitimacy vote. Both parties are up against strong opposition.
The Turkish president, however, seemed to be sticking to his unfavourable policies despite the experts’ recommendations to reverse them.
The central bank had left the record interest rate unchanged since March, when President Recep Tayyip Erdogan sacked former Central Bank Governor Naji Aghbal, who raised interest rates from 10. 25 percent during his four -month period to control inflation.
Erdogan, who sacked three rulers in a little more than two years, stresses that high interest rates are inflationary, a view that contradicts traditional economic theory.
Turkey has the highest inflation among the major emerging markets, surpassing crisis-hit Argentina.
Turkey’s inflation rate has reached its highest point in almost 25 years.
About Author
