Inflation in Turkey reaches 83%; Erdogan promises to continue cutting rates

Exchange rate information at an exchange office in Istanbul, Turkey in June. Inflation for the country of 84 million people has soared over the past two years, especially when Turkish President Recep Tayyip Erdogan insists on continuing to cut interest rates rather than raise them, which which deviates from the conventional way of controlling inflation.

Erhan Demirtas | Bloomberg | Getty Images

Turkey’s inflation hit a new 24-year high of over 83% for September, the country’s official statistics body reported on Monday.

Consumer prices rose 3.08% month-over-month and 83.45% year-on-year. The national producer price index rose 4.78% from the previous month and 151.5% year-on-year.

Inflation for the country of 84 million people has soared over the past two years, especially when Turkish President Recep Tayyip Erdogan insists on continuing to cut interest rates rather than raise them, which which deviates from the conventional way of controlling inflation.

“My biggest battle is against interest. My biggest enemy is interest. We have lowered the interest rate to 12%. Is that enough? Erdogan at an event in late September.

In the past two months alone, Turkey’s central bank – believed to be under Erdogan’s control – cut rates by 200 basis points to 12%, shocking markets. The Turkish lira is currently trading at an all-time high of 18.56 to the dollar and has lost around 28% of its value against the greenback this year.

Turkish officials say their measures will reduce inflation in the coming months, but many economists disagree and expect consumer prices to rise and the lira to fall further next year. .

“With external financing conditions tightening, risks remain firmly tilted towards a sharp and disorderly decline in the pound,” Liam Peach, senior emerging markets economist at Capital Economics, wrote in a note after the latest rate cut. Turkey on September 22.

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