Erdogan plans to reverse course on the economy and raise interest rates significantly.

As his new economic team works to reduce the rate of inflation, President Recep Tayyip Erdogan’s unconventional economic policies in Turkey are about to be reversed. Interest rates are anticipated to significantly increase from their present level of 8.5% in less than a month after Mr. Erdogan was re-elected. Inflation is close to 40%, and the cost of living crisis is engulfing Turks. However, the president of Turkey has up to this point insisted on low interest rates.

The fact that Turkey’s inflation rate is still persistently high and its central bank’s reserves have declined to dangerously low levels after having spent billions of dollars trying to support the currency is President Erdogan’s problem. The fact that Turkey’s inflation rate is still persistently high and its central bank’s reserves have declined to dangerously low levels after having spent billions of dollars trying to support the currency is President Erdogan’s problem.

Many economists recommend hiking interest rates to combat excessive inflation, but Turkey’s Erdogan fired three governors of the central bank in less than two years when they insisted on following conventional tactics. Interest rates have decreased in recent months from 19% two years ago to 8.5%. They are about to climb once more, which will have an impact on a nation already experiencing an economic crisis.

During the first few years that President Erdogan was in office, Turkey’s economy experienced rapid growth. He has, however, abandoned conventional economic knowledge in recent years by blaming excessive inflation on high borrowing costs and attempting to boost economic development. Turkish currency has lost more than 80% of its value in the last five years, and foreign investment has plunged. Turkey is currently attempting to remove foreign currency from domestic banks.

Turkey has had Mr. Erdogan as president for more than 20 years. Last month, he defeated the opposition candidate in elections that, according to international observers, were unfairly rigged to favour the incumbent president. He stayed true to his word that interest rates would stay low for the duration of his administration, guaranteeing that economic policy would not change. The opposition pledged to shift the conversation away from low interest rates.

Although Mr. Erdogan claimed last week that his views on interest rates had not changed, we agreed that he should work with the central bank to quickly and easily take the required actions.

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