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Market in Izmir, Turkey: inflation in September at 83.5 percent
Photo:
Aedile Toffolo / IMAGO
Despite the extreme inflation, the Turkish central bank has once again lowered its key interest rate.
The central bank announced that the interest rate would be reduced by 1.5 percentage points to 10.5 percent.
The majority of economists had expected a reduction to just 11.0 percent.
It is the third rate cut in a row.
Inflation was 83.5 percent in September - the highest level since 1998. According to economic doctrine, significant interest rate increases would actually be the order of the day in order to cool down economic activity and get inflation under control.
However, Turkish President Recep Tayyip Erdoğan is opposed to high interest rates.
Erdoğan had repeatedly put pressure on the central bank.
The Turkish lira hardly reacted to the interest rate decision, but has been under pressure for some time given the very loose monetary policy.
Trading against the dollar, it is hovering near its all-time record low.
The weak lira makes import prices more expensive and also drives inflation.
In addition, there are persistent problems in the international supply chains, which make preliminary products more expensive.
In addition, the prices of energy and raw materials are rising, mainly because of the Russian war against Ukraine.
sol/dpa
