H Turkish pound fell today, Wednesday (3/11) as annual inflation in Turkey increased to 19.89% in October, the highest level of almost 2.5 years, from 19.58% in September.
In particular, the central bank’s key interest rate, which stands at 16%, is already much lower than inflation after falling by three percentage points this year from the central bank under pressure from the president Recep Tayyip Erdogan.
Structural inflation, excluding energy, food and some other goods, fell to 16.82% from 17% last month. The Turkish currency fell to 0.8% today, with losses then narrowing to 0.2% and the exchange rate hovering at 9.627 pounds per dollar, as inflation was expected at 20.4%.
The pound has lost almost 23% of its value this year, mainly due to uncertain and unconventional monetary policy, according to the APE-MPE.
“The slight drop in structural inflation and the political pressure on the central bank mean that further interest rate cuts will follow,” said an economist at Capital Economics. “We have discounted the reduction of the key interest rate by one percentage point in the (central bank) meeting this week,” and further aggressive easing, he added.
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