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Turkey surprises markets with rate cut despite inflation near 80%

Turkish President Tayyip Erdogan arrives for a NATO summit in Madrid, Spain June 29, 2022.
Nacho Doce | Reuters

Turkey’s central bank shocked markets Thursday with a cut to its benchmark policy rate, despite inflation in the country sitting near 80%.

Its main policy rate, which had been at 14% for the last seven months, was cut to 13% in a complete mismatch to what other central banks are doing around the world.

Turkey’s inflation for the month of July rose by an eye-watering 79.6% year on year, its highest in 24 years, as the country grapples with soaring food and energy costs and President Recep Tayyip Erdogan’s long-running unorthodox strategy on monetary policy.

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