The Turkish central bank maintained Thursday for the fifth consecutive month its main key rate at 14%, refusing to raise the latter in an attempt to stem inflation from 70%, the highest in 20 years and that the war in Ukraine risks further accentuate.
President Recep Tayyip Erdogan, who believes contrary to classic economic theories that high interest rates promote inflation, had forced the central bank to lower its key rate from 19% to 14% between September and December, causing the collapse of the national currency.
The Turkish lira has thus seen its value melt by 44% against the dollar in 2021 and has again lost 23% against the greenback since January 1, despite repeated interventions by the central bank.
Rumors of Turkish intervention in Syria in recent days have further depressed him.
The Turkish lira was trading Thursday afternoon around 16.4 pounds to the dollar, levels that had not been reached since December 2021, when the pound had hit its historic low of 18.4 pounds to the dollar.
The process of disinflation will begin with the restoration of an environment of peace in the world and the disappearance of the base effects of inflation, indicates the central bank in a press release to justify its decision.
As a result of the collapse of the Turkish lira and the surge in energy prices in particular, inflation soared to 69.97% over one year in April, according to official figures, the highest since April. came to power in 2002 from President Erdogan’s Justice and Development Party (AKP).
up 100 € bonus openness thanks to our comparison of online banks
In power for nineteen years as Prime Minister and then as President, the Head of State hopes to be re-elected in the next presidential election, scheduled for June 2023.
Recep Tayyip Erdogan, who has built his electoral success of the last two decades on his promises of prosperity, assured at the end of April that inflation would begin to slow after May.
He is due to receive Saudi Crown Prince Mohammed bin Salman in early June, with Ankara seeking to reconnect with Saudi Arabia to support its struggling economy.