On Thursday, the Turkish Central Bank announced a new surprise interest rate cut of 100 points to 12%, which sent the lira plunging to its lowest level ever, despite inflation rising more than 80% and central banks around the world in the race to tighten the political currency.
The lira plunged to an all-time high of 18.42 against the dollar, below the level reached during the overall currency crisis in December. before boarding at 18.38 by 1125 GMT.
Analysts say monetary easing is unsustainable and comes In response to the efforts of President Recep Tayyip Erdogan To reduce the financial costs of increasing exports and investments, they expect further depreciation of the currency in the future.
Unconventional interest rate cuts over the past year, coupled with rising commodity prices, have pushed inflation to 24-year highs and triggered a price crisis for Turks.
The Central Bank justified this move with continued signs of an economic slowdown and once again stated that it expects the rate of inflation to start falling.
“Leading indicators for the third quarter continue to point to a loss of momentum in economic activity due to lower external demand,” the bank’s policy committee said.
And 11 of the 14 economists Reuters surveyed predicted interest rates would remain unchanged. One called for a 50 basis point cut at 12.50%, while two called for a 100 basis point cut at 12%.
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