Home » Business » Turkey: The pound collapses – Inflation at 67.1% – 2024-03-07 02:16:47

Turkey: The pound collapses – Inflation at 67.1% – 2024-03-07 02:16:47

Turkey’s currency hit a new record low on Monday as inflation climbed to 67.1% in February. This is the highest level since November 2022. At the same time, the Turkish lira rose above 31 to the dollar from 16 in mid-December 2021.

Investors have been watching corrective moves by the finance ministry and the central bank since Erdogan last summer gave the green light for a return to conventional policy.

Mehmet Simsek said appreciations will remain strong in the coming months as existing rate hikes are absorbed. It should be noted that the central bank has increased the cost of borrowing in the economy by 3,650 basis points since last June. At this stage, however, the cycle of rising interest rates has frozen at 45% as it is considered that this level is sufficient to rein in inflation.

Some analysts do not rule out a further increase in the key interest rate after the local elections to be held at the end of March. Especially after the recent upward adjustment of the basic salary. Even structural inflation, ie excluding volatile energy and food prices. “It is high and if this continues then the pressure on the bank to restart the cycle of rising interest rates in the coming months will intensify,” commented Liam Peaches, an economist at Capital Economics, to Reuters.

Inflation

Annual inflation jumped to a 15-month high of 67.1 percent from 64.9 percent in January, according to data released by Turkey’s statistics agency. The figure is higher than analysts’ estimates at Bloomberg, which called for 66%.

The country’s central bank is closely monitoring the strengthening of inflationary pressures. That is why it is still on the lookout after the pause in interest rate hikes.

#Turkey #pound #collapses #Inflation

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