Turkey’s central bank on Thursday held its benchmark interest rate at 14% for the seventh consecutive month, as expected, despite a spike in inflation to nearly 80% and a global cycle of monetary tightening, with the institution repeating that it expects the start of a disinflation.
The Turkish prime rate was cut by 5 percentage points last year, even though prices were already rising, in an unorthodox policy championed by the country’s President Tayyip Erdogan that has left real yields deeply negative.
Monetary easing triggered a currency crisis that eroded 44% of the lira’s value against the dollar in 2021, further fueling inflation.
The lira has weakened a further 25% so far this year, while inflation hit a 24-year high of 78.62%.
In a Reuters poll, all 18 economists polled expected the week-long repo rate to remain unchanged as the Turkish central bank pursues Erdogan’s economic program based on cheap credit to boost exports.
Source: CNN Brasil
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