Turkey’s central bank on Thursday cut its policy rate for the second straight month despite an annual inflation rate that has reached 80 percent and still moving higher, Agence France-Presse reported.
The central bank said it was cutting its one-week repo rate to 12 percent from 13 percent and attributed skyrocketing consumer prices on external factors such as the global jump in the cost of energy and food caused by Russia’s invasion of Ukraine.
The decision highlights Turkish policymakers’ strong focus on economic growth nine months before a general election that polls show President Recep Tayyip Erdoğan is on track to lose.
Official data shows Turkey’s industrial production and retail sales both starting to slow.
Erdoğan has openly championed economic growth at all cost.
He also rejects conventional economics and believes that inflation can be brought under control by cutting interest rates.
“I am an economist. Inflation is not an economic danger that cannot be overcome,” Erdoğan told US television this week.
“Currently, there are countries which feel threatened by inflation of even eight or nine percent. We have 80 percent,” he said.
“And in my country, the shelves are not empty in the markets.”