Inflation in Turkey has touched the highest level in 20 years, topping 54% as higher energy and food prices swelled the import bill while the Lira continues to suffer.
But Turkey has seen a lot worse, in 1995 the nation battled with severe price rise where the inflation tally topped a 105% and experts see price rise atleast topping 65% by this summer.
So the natural question is why not raise rates to curb the inflation crisis? While Turkish lira has nearly halved in value in just as year, Turkish President Recep Tayyip Erdogan refuses to raise rates even as inflation consistently climbed. Turkey’s central bank has cut interest rates by 500 basis points since September to 14%.
Infact Turkish President Tayyip Erdogan dismissed three central bank policymaker in October as they opposed his low rate high inflation mandate to boost the economy.