Turkish central bank lowers interest rate to 12%

Turkey’s central bank cut its key interest rate once again with a surprise decision on Thursday despite soaring inflation that left people struggling with a cost-of-living crisis. 

The country’s monetary policymakers decreased the policy rate a 100 basis point, bringing the rate from 13% to 12%. 

In August, Turkish inflation rate was recorded at 80.2%, its highest level in 24 years.

A statement from the central bank said it has “assessed that the updated level of policy is adequate under the current outlook,” Reuters reported. 

Turkish President Recep Tayyip Erdogan has long railed against interest rates and turned against economic orthodoxy by insisting that lowering rates are the way to bring down inflation.

As a result of the year-long campaign that continuously lowered rates, Turkey’s trade and current account deficit peaked and its foreign exchange reserves ran as the lira lost more than 27% of its value to the dollar year to date, and 80% in the last five years.