New low for the Turkish lira on expectations of a further interest rate cut

Ankara, Dec 16 (EFE) – The Turkish lira has marked today at the opening of the markets a new record low, changing to 15.17 units per dollar and 17.17 per euro, while the Central Bank is expected to announce whether to cut interest rates again.
Most experts expect the issuing bank to reduce interest rates again today, lowering them by one point to 14%, or to keep them unchanged.
The central bank already cut rates to 16% in October and 15% in November, following Turkish President Recep Tayyip Erdogan’s view that lowering interest rates helps fight rising inflation, which is already at 21.3%.
That strategy, which contradicts that of most economists, is one of the factors that analysts see behind the sharp depreciation of the lira, which has lost 30% of its value in the last four weeks, and 45% since the beginning of the year.
Erdogan argues that cutting interest rates benefits production, exports and credit.
Another option that experts handle is that the Bank decides to keep rates as they are.
Analysts believe that a drastic rise in rates would be necessary to end the inflationary dynamics and the loss of value of the currency.
In fact, in autumn 2018 the interest rate hike to 24% stabilized the lira around 6 units per euro for almost two years.
But since then, Erdogan has decreed three times a change of the governor of the Bank, allegedly for opposing his guidelines to lower interest rates.