Stock market falls as US inflation comes into view

Türkiye's inflation rate approaches 65%


Turkey's annual inflation rate approached 65% in December, reaching its highest level in 2023 and on track to reach an expected peak of 70-75% in May.

President Recep Tayyip Erdogan's new team of market-oriented economists expects inflation to start falling from near record highs within four months.

The rate reached a multi-decade high of 85% in October 2022, then fell, before resuming its steady rise.

Turkey's official annual inflation rate rose to 64.77% in December from 61.98% in November.

However, the month-on-month rate of increase was 2.93%, the smallest increase in the past six months.

“The underlying inflation trend has improved slightly and inflation expectations have stabilized in recent months,” said Bartosz Sawicki, market analyst at Konotoxia Investment Company.

Liam Peach of Capital Economics said the latest figures “will generally reassure central banks.”

Analysts say President Erdogan, who has called high interest rates the “root and father of all evil,” will force the nominally independent central bank to start cutting borrowing costs in 2021, sparking an inflationary spiral. He is accusing the government of

After winning a difficult re-election last May, he reversed course and appointed acclaimed economist Mehmet Simsek as finance minister and former Wall Street executive Hafizeh Gey Erkan in charge of the central bank.

The central bank subsequently raised Turkey's benchmark interest rate from 8.5% to 42.5%, overcoming President Erdogan's aversion to previously high borrowing costs.

President Erdogan supported their new plan and signaled a major economic policy shift after more than two decades in power.

Source: guardian.ng

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