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Turkish central bank cuts key interest rate - despite inflation of 20 percent

2021-10-21T13:59:03.153Z

The Turkish central bank has lowered the key interest rate despite the high inflation rate. Economists consider this to be the completely wrong path.



The Turkish central bank has lowered the key interest rate despite the high inflation rate.

Economists consider this to be the completely wrong path.

Ankara - Despite a very high inflation rate, the Turkish central bank surprisingly lowered the key interest rate significantly on Thursday.

She is apparently giving pressure to President Recep Tayyip Erdogan.

Contrary to popular belief, he believes that the country's economy, which is suffering from high inflation, can be stimulated with lower interest rates.

As the central bank announced in Ankara on Thursday, the key interest rate will be reduced by 2.0 percentage points to 16.0 percent.

Economists had only expected a decrease to 17 percent on average.

Turkey: Lira at record low

The Turkish lira came under considerable pressure and fell to record lows against the US dollar and the euro.

The Turkish lira has fallen by over 20 percent against the dollar this year.

The euro rose to more than 11 lira for the first time.

The prices of Turkish government bonds came under severe pressure.

The Turkish stock markets turned into the red.

After the interest rate cut, the key interest rate is even more significantly below the high inflation rate.

This was 19.58 percent in September.

This means that the real interest rate, i.e. the key rate minus inflation, is negative.

Economists agree that the current situation, on the other hand, speaks in favor of interest rate hikes.

Investing in Turkish assets is now becoming even less attractive.

This is also putting pressure on the Turkish currency.

The weak lira is also fueling inflation as imported goods become more expensive.

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Dax due to inflation concerns with quarterly loss

Investors on the German stock market remained nervous on Thursday.

The Dax went 0.68 percent lower at 15,260.69 meters from trading.

The MDax with the medium-sized values ​​lost 0.44 percent to 34,369.69 points.

Dax due to inflation concerns with quarterly loss

Weak Wall Street puts pressure on Dax

The German stock market got off to a weaker start to the week.

After hardly any movement over long stretches of the trading day, the Dax came under pressure in the late afternoon in the wake of significant losses on the US stock exchanges.

Weak Wall Street puts pressure on Dax

Dax has a weak start in October

The Dax started October with losses on Friday.

After an unsettled course, the German benchmark index finally lost 0.68 percent to 15,156.44 points.

Dax has a weak start in October

Erdogan has already fired three central bankers

President Erdogan recently fired three central bankers whose monetary policy he did not agree with.

The current central bank chief Sahap Kavcioglu has only been in office since March after his predecessor Naci Agbal was dismissed for raising interest rates.

Kavcioglu is now the fourth central bank governor since 2019. All of his predecessors were ultimately out of favor because they did not support Erdogan's preferred course of loose monetary policy.

(dpa)

Source: merkur

All news articles on 2021-10-21

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