Inflation in Turkey remains at a very high level despite the tighter monetary policy of the local central bank. In November, consumer prices rose by almost 62 percent year on year.
This means that the devaluation of the currency is approximately at the same level as in the previous two months. Analysts had expected slightly higher interest rates.
Monetary policy was tightened considerably
In response to high inflation, which rose to around 85 percent last year, the Turkish central bank has significantly tightened its monetary policy following a change in leadership.
However, the key interest rate is currently 40 percent, still well below inflation. The crucial real interest rate is therefore still negative. The economy is still stimulated by monetary policy – and therefore also by inflation.
The local currency, the lira, has also hardly benefited from the central bank’s stricter monetary policy until recently. It is still near historic lows against the US dollar and the euro. This makes many imports into Turkey more expensive and further increases inflation.
Source: Krone
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