Turkish lira falls to new record low after Turkish central bank surprises market by announcing 1.50% rate cut, even as inflation soars above 80%.
The lira fell against the dollar to 18.6150, below 18.38, its previous record low.
The lira has also fallen 29% this year after plunging 44% in 2021.
Turkey’s central bank cut the key interest rate by 1.50% to 10.50%, although Turkey’s inflation rate reached 83% in September due to a rise in energy and food prices.
Most analysts had expected the Turkish central bank to cut interest rates by only 1%.
The Turkish central bank’s action goes against the trend of central banks around the world raising interest rates.
Previously, in September 2021, the Turkish Central Bank began to cut interest rates under pressure from Turkish President Recep Tayyip Erdogan, who previously announced the dismissal of several central bank governors because it does not comply with the government’s monetary easing policy. Erdogan argued that the application of a low interest rate policy would boost exports and employment in the country.