Turkey’s infflation crossed 80% in August, the highest since 1998, largely due to surging costs of importing energy. Monthly inflation data are shown in the chart below.
Souce: https://www.tcmb.gov.tr
According to the graph, it is seen that inflation increased without slowing down and finally reached 80%. Despite rising inflation rate Turkey has cut the key rate by 1 percenteage points on August 19th 2022, the interest rate was reduced from 14% to13%. The same decision was made on September 22nd 2022, the Central Bank has lowered its interest rate by 100 bps to 12%. The decision to lower borrowing costs was made despite a plunging lira, soaring consumer prices, and an unbalanced current account. A statement from the Central Bank of the Republic of Turkey said it has “assessed that the updated level of policy is adequate under the current outlook”. It said the cut was necessary as growth and demand continued to slow and also cited “escalating geopolitical risk.”
Bibliograpy:
www.cnbc.com, tradingeconomics.com.
