Analysis: Is President Erdogan sticking to his new monetary policy as inflation rises dramatically in Turkey?

Analysis: Is President Erdogan sticking to his new monetary policy as inflation rises dramatically in Turkey?

According to a report from www.businessinsider.de, inflation in Turkey is back at almost 60 percent in August and the local currency, the lira, is coming under pressure again. The central bank has recently raised interest rates twice, marking a 180-degree turn in President Erdogan's policy. However, it is doubtful whether the financial markets trust Erdogan's new course. The serious impact of high inflation in Turkey is due to the fact that the weak lira makes imports more expensive. This in turn leads to a general increase in the price of goods for consumers. In addition, the government in Ankara has increased important taxes to finance the costs associated with a major earthquake and to stabilize the state budget. Despite multiple interest rate hikes, the lira exchange rate is still near historic lows, reflecting uncertainty over future monetary policy and Erdogan's new course. The appointment of experts in key positions and the increase in the key interest rate to 25 percent show that the Turkish central bank is determined to curb inflation. However, it remains to be seen whether this approach will prove effective. These inflation developments in Turkey are expected to lead to further devaluations of the lira and further weaken financial markets' confidence in the Turkish economy. It is uncertain whether President Erdogan will be able to implement his new monetary policy in the long term and how the situation will affect the international financial industry.