A currency meltdown, rocketing inflation, civil unrest. This is the current picture of Turkey’s economy, whose president Recep Tayyip Erdoğan has declared “an economic war of independence”.
Erdoğan’s gamble, which uses monetary policy to drive investment and job creation, is not one that many are willing to take. Faced with fears inflation will become entrenched, pushing advanced economies to withdraw accommodative monetary policy, most emerging market economies have gone in the opposite direction. While the Turkish central bank aggressively slashes interest rates, others, including South Africa, have started to raise theirs.
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