In shock move, Turkey cuts interest rates again
Inflation is historically high in Turkey, but President Erdogan continues to defy economic wisdom as the country's central bank slashed policy rates further.
Turkey cut interest rates again today, despite the extremely high level of inflation in the country.
What happened: The Turkish Central Bank cut its one-week repo auction rate 100 basis points from 13% to 12%, according to a press release.
Repo rates are interest rates on central bank purchases of financial securities, e.g., bonds from commercial banks. This is Turkey’s main policy rate.
The central bank noted rising inflation worldwide in the statement, underscoring rising energy and food costs. The bank attributed this to “geopolitical developments,” which is an apparent reference to fallout of the war in Ukraine. The bank added that Turkish economic growth was “strong” during the first half of the year and that they expect inflation to fall based on its previous interventions.
