Turkey: Inflation Crisis Rages But Central Banker Isn’t Blinking

Source Bloomberg

“Turkey’s central bank governor downplayed the inflation crisis plaguing his country, blaming external shocks and defending the ultra-loose policies he credits for forging the most recession-proof economy in Europe. Governor Sahap Kavcioglu said Thursday that consumer inflation will end the year almost 18 percentage points higher than the central bank’s last projections showed in April. It’s now set to reach 60.4%, about 12 times the official target, before slowing to 19.2% by the end of next year and 8.8% in 2024. … Inflation in Turkey is already at a 24-year high, with Goldman Sachs Group Inc. expecting it to peak at 90% in October-November and Bloomberg Economics seeing it at 69% at the end of the year. At almost 65% below zero, the country’s borrowing costs are the world’s most negative when adjusted for prices. But Kavcioglu has the backing of President Recep Tayyip Erdogan, who believes — contrary to mainstream economics — that higher rates cause faster inflation.” (07/28/22)