The Turkish central bank surprised today by going ahead with yet another big increase in its key interest rate, from 17.5% to 25%so as to prevent a further rise in inflation.
“The Commission decided to continue the process of monetary tightening in order to follow the fastest possible path towards deflation (…) and to control the deterioration of the behavior of prices”, the central bank states in its statement.
This is another step by the economic staff towards “economic rationality” and away from Erdoganomicsthe economic policy implemented in the previous period by Recep Tayyip Erdogan, leading the Turkish economy to the bottom, with an unthinkable inflation and the depreciation of the Turkish lira.
Based on Erdoganomics, interest was treated as a “sin” and as the “cause” that gives rise to the problem of inflation. The “Sultan” claimed that the policy of low interest rates, i.e. cheap money, encourages growth and in this way the problem of high inflation will be solved.
The shift to the interest rate issue, apparently with Erdogan’s approval, is a high-stakes decision for the Turkish President, who after his historic election victory, he is called to face the disastrous consequences of his economic policies precisely making everyday life unbearable for a large part of Turkish society.
Source: News Beast
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