Erdogan Tries to Bully The Central Bank

摘要

Turkish President Recep Tayyip Erdogan has long subscribed to a theory that flies in the face of conventional economic thinking: High interest rates stoke inflation rather than damp it. That's why for weeks he publicly warned Turkey's independent central bank against lifting borrowing costs at its next rate-setting meeting. On Dec. 14, Erdogan chalked up a small victory.The bank's decision to raise its key interest rate only 50 basis points, to 12.75 percent, sent the lira into a brief tailspin and confounded more traditionally inclined economists. "Is this a joke?" asked Timothy Ash, senior emerging-market strategist at BlueBay Asset Management LLC in London, in a note to clients. Ash says that with inflation running at 13 percent, much more than double the bank's target, the correct policy move would have been an increase of 4 percentage points. "Either directly or sublim-inally," Ash said in a later email exchange, policymakers had bowed to political pressure.