In the News
Currency Economics - Turkish lira in free-fall despite interest rate rise
21st November 2021
The Turkish monetary authorities raised interest rates by 1% (or 100 basis points) and saw the currency fall in value by 6%.
And President Erdogan's argument - that high interest rates have been the cause of inflation - seems somewhat detached from economic reality, with most people being of the view that interest rates are a powerful anti-inflationary tool, if the cause of inflation is demand-pull.
Of course, lowering rates, and the subsequent fall in the value of the currency, is likely to worsen the situation - imports will have become more expensive, and exporters will have less of an incentive to keep their costs in check too.
It looks as though the government might have lost control of the economy.
You might also like
Exchange Rates - An Introduction
Study Notes
Turkey seeks to escape the Middle Income Trap
16th December 2014
Turkey in Transition: The Path to High Income
17th December 2014
Reviving Turkey's Economy
19th May 2015
The squeezed middle
16th August 2015
Shifts in the share of Global GDP
Study Notes
IMF warns higher interest rates might trigger a new financial crisis
29th September 2015
Why might the US raise its interest rate?
14th December 2015