The most important step would be reversing an easing cycle that began in autumn 2021 during which Turkey’s benchmark interest rate dropped by more than ten percentage points
of trying to bring down inflation by making borrowing cheaper. It is precisely the opposite of what any mainstream economist would advise, and it was never going to work. Now the recently re-elected president’s new cabinet, which includes Mehmet Simsek, a voice of economic orthodoxy, as the new treasury and finance minister, suggests his wild ride may have run its course.
Of these, the most important would be reversing an easing cycle that began in autumn 2021 during which Turkey’s benchmark interest rate dropped by more than ten percentage points. The interest-rate cuts, ordered by Mr Erdogan, sustained economic growth, which reached an annual rate of 4% in the first three months of this year. But they also caused galloping inflation, which peaked at 86% last year before easing, to 44% in April.
Rumours of Mr Simsek’s appointment failed to check the lira’s slide last week. That is because investors believe that the central bank has run out of money to intervene in currency markets. The bank sold tens of billions of dollars to prop up the currency ahead of last month’s elections, a policy that helped Mr Erdogan secure a third term as president but left the bank’s coffers depleted. Net foreign reserves fell below zero at the end of May for the first time in two decades.
Ireland Latest News, Ireland Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Recep Tayyip Erdogan sworn is as Turkey's president for unprecedented third termErdogan has taken his oath to be sworn in as Turkey's president for an unprecedented third time
Read more »
Turkey's President Erdogan sworn in for third term in officeThe Turkish President won an unprecented third presidential term earlier this month.
Read more »
Erdoğan signals economic shift for Turkey as he revamps cabinet\n\t\t\tGet local insights from Lisbon to Moscow with an unrivalled network of journalists across Europe,\n\t\t\texpert analysis, our dedicated ‘Brussels Briefing’ newsletter. Customise your myFT page to track\n\t\t\tthe countries of your choice.\n\t\t
Read more »
Turkey's Erdogan Takes Oath of Office for His Third TermTurkey’s longtime leader, Recep Tayyip Erdogan, took the oath of office on Saturday, ushering in his third presidential term that followed three stints as prime minister
Read more »