ANKARA, Turkey (AP) — Turkey’s central bank delivered one other outsized rate of interest cut Thursday despite inflation running at greater than 85% and other countries moving the alternative approach to ease the pain of soaring prices.
The central bank said its Monetary Policy Committee decided to lower the benchmark policy rate by 1.5 percentage points to 9%, following a series of comparable jumbo cuts.
The move is in step with President Recep Tayyip Erdogan’s unorthodox economic views that prime borrowing costs cause high inflation, although traditional economic pondering says raising rates of interest help tame inflation.
Erdogan had called for a single-digit rate of interest by the tip of the 12 months. He’s counting on lower borrowing costs to propel the economy as Turkey gears up for presidential and parliamentary elections next June.
The bank had similarly cut borrowing costs by 1.5 points last month and by 1 point each in August and September. The Monetary Policy Committee announced, nonetheless, that the easing cycle would now come to a halt.
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“Considering the increasing risks regarding global demand, the Committee evaluated that the present policy rate is adequate and decided to finish the speed cut cycle that began in August,” it said in a press release.
Inflation hit a raging 85.51% in October, in line with official statistics, making even basic necessities unaffordable for a lot of. Independent researchers estimated, nonetheless, that actual price increases are much higher than the official figures.
The European Central Bank, U.S. Federal Reserve and other central banks around the globe have taken the reverse course of Turkey, rapidly raising rates of interest to clamp down on soaring consumer prices. Sweden raised its key rate by three-quarters of a percentage point on Thursday.
Their inflation rates are far below Turkey’s, running at 10.6% within the 19 countries using the euro currency, 9.3% in Sweden and seven.7% within the U.S. last month.
The Turkish lira has lost some 28% of its value against the U.S. dollar because the starting of the 12 months — on top of taking a fair worse battering in 2021.
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