ISTANBUL — Turkey’s main bank provided another huge interest rate cut Thursday regardlessof eye-popping inflation above 80%, moving the opposite method from world economies that are raising rates to control costs as the lira sunk to record lows.
The Central Bank of the Republic of Turkey decreased the criteria rate by 1 portion point, to 12%. The lira was trading around 18.38 versus the dollar, weakening more than the previous record low of 18.36 in December.
The devaluation of Turkey’s currency is mostlikely to magnify the monetary concerns of locals who haveactually seen their buying power deteriorate throughout a series of financial shocks in the nation.
Turkey has followed President Recep Tayyip Erdogan’s unconventional belief that high interest rates cause high inflation, cutting loaning expenses inspiteof customer costs increasing by 80.21% in August from a year earlier. Traditional financial thinking states raising interest rates battles inflation.
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