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Turkish lira remains volatile after surprise dip in inflation data

Turkey’s annual inflation unexpectedly dropped to 16.59% in May, according to data published Thursday. The news did not steady the nation’s currency, which slid on market concerns over an early interest rate cut.
Vendors sell dry food as people shop by a banner reading "No to Inflation" near the New Mosque area in Istanbul's Eminonu district on Nov. 6, 2018. Inflation in Turkey surged to over 25% in October from the same period the year earlier, the highest annual rate for over 15 years, official statistics showed on Monday. Prices have soared in Turkey over the last months as the lira came under pressure, stoking fears over the long-term economic health of the country.

ISTANBUL — Bucking a seven-month trend of steady increases, Turkey’s annual inflation rate fell slightly in May, catching forecasters by surprise after many projected another rise for the month.

According to data published Thursday, the nation’s year-on-year inflation dipped to 16.59%, down from 17.14% in April. The unexpected news raised concerns policymakers might bow to pressure from Turkish President Recep Tayyip Erdogan and cut key interest rates early, which translated into the lira sliding more than 1% on the day, trading at 8.71 per US dollar at 4 p.m. Istanbul time.

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