Turkey’s policy stance, including a 19% interest rate, will secure a decline in inflation in the fourth quarter, the country’s central bank chief told investors on Wednesday, Reuters reported, citing two sources on the conference call.
Turkey’s 19% policy rate is among the highest globally yet only slightly above inflation, which was 18.95% in July and is expected to remain mostly stable in August. Analysts expect rate cuts to begin toward year end.
Official data showed Wednesday that Turkey’s economy grew a massive 21.7% year-on-year in the second quarter as expected rebounding powerfully after a sharp slowdown a year earlier driven by COVID-19 restrictions.
It expanded 0.9% compared to the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed. The lira firmed as far as 8.29 after the figures from a close of 8.32.
However, the boom in economic activity is feeding into – and in turn, being eroded by – double-digit inflation. August’s inflation reading, due on Friday, is expected to stay close to July’s 18.95%.