Turkish lira CRISIS: Turkey facing turmoil as inflation rockets to 15-year high

Monday, September 3, 2018
By Paul Martin

TURKEY is bracing itself for yet more turmoil with the lira after new data revealed that inflation rocketed to its highest level in 15 years.

Mon, Sep 3, 2018

The currency has slumped by a massive 40 percent against the US dollar so far this year alone, hit be fears over President Recep Tayyip Erdogan’s control over monetary policy and an escalating diplomatic fead with the US.

The country’s central bank signalled that the worsening outlook for inflation was becoming a bigger risk, saying its stance would have to be adjusted at its next meeting on September 13 – despite not raising its benchmark rate in nearly three months despite the worsening currency crisis.

After official data that showed inflation at 17.9 percent in August – marking its highest level since late 2003 – the bank said: “Recent developments regarding the inflation outlook indicate significant risks to price stability.

“The central Bank will take the necessary actions to support price stability.”

Turkey’s Finance Minister Berat Albayrak has said that the country’s central bank is independent of the government and will take all necessary steps to combat inflation.

He does not expect any problems in the banking sector, which is in stark contrast to a number of warnings from ratings agencies that the lira sell-off could significantly weaken lenders’ assets.

Speaking to Reuters, Mr Albayrak said: “The central bank in Turkey has been maybe more independent than those in other countries,” adding the country has reached a point where it requires a “full-fledged fight against inflation”.

It is the latest twist after weeks of feuding between Turkey and the US as relations between the two nations threatens to reach breaking point.

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