High Inflation and Interest Rate: The inflation rate in India was 5.5 percent in November and the interest rates of most banks were around 8 to 12 percent. Despite this, people are troubled by the rising prices of goods and interest rates in retail. People create noise about inflation. Imagine what will happen to you if the inflation rate reaches 62 percent and interest rates go above 42 percent. Something similar is happening in Türkiye. The people there are going through this unbearable situation. Let us know why this is happening.
Failed to control inflation
According to Reuters report, inflation has increased so much in Turkey that the Central Bank there has increased the policy interest rates by 2.5 percent to control it. With this the interest rates there have reached 42.5 percent. For the last three months, interest rates were increased by 5-5 percent every month. The Monetary Policy Committee of the Turkish Central Bank has increased the policy rates for the 7th consecutive time to reduce inflation. The inflation rate in Türkiye was around 61.98 percent last month. Experts estimate that it will reach 75 percent by May. However, by the end of 2024 it may come down to around 35 percent.
Neither inflation rate nor interest rates are being controlled
The people of Turkey are unable to bear this impossible inflation rate and interest rates. People are not able to buy even small things of daily needs. People are not able to even pay the rent. Turkey's central bank is increasing interest rates to stop inflation. But, it doesn't seem to have any effect. Neither inflation nor interest rates are being controlled. The public is being ground like wheat between two wheels of a mill. However, now that the situation has become unbearable, the Central Bank has definitely indicated that interest rates will not be increased further. But, experts say that at present there are no chances of getting any relief.
Special team also failed in providing relief
Turkish President Recep Tayyip Erdoğan, after winning the elections in May, had formed a special team to control the economic situation. Former Merrill Lynch banker Mehmet Simsek was made finance minister and Hafiz Gay Erkan, a former American bank executive, was made governor of the central bank.
Foreign investment is disappearing
Erdoğan thought that inflation could be controlled by reducing interest rates. But, previous governors opposed it. Angered by this, the President fired him. Türkiye's economy is going through a very bad phase. Foreign investment is going out of the country. Besides, foreign exchange reserves have also decreased rapidly.
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