A tragedy is unfolding in Turkey. Any vestige of central bank independence has vanished: a further rate cut ordered by the President today sent the lira to 11.11/$ at one point (now 11.03). Another rate cut next month is expected, with the predictable Fx effect.
The Minister of Finance, who opposes the President's wrongheaded interest rate policy, is likely to be sacked. Leaked video of an AKP party caucus today made his isolation clear. The last remaining voice of sanity in ruling party circles.
Inflation is officially 20%, but actually at least 30-40% month on month. Hoarding of basic supplies has started: some markets are reported to be limiting customers to one bottle of olive oil per purchase, for example.
Informed people hold out no hope for a change of economic policies under the current regime, and think elections offer the only way out of an unsustainable impasse. The next regular elections are in June '23, too long to wait. Some hope for early elections, possibly in Nov. '22.
There are signs of government action to curry voters' favor (e.g., increase in minimum wage), possibly in anticipation of an early vote. But even early elections would be too far off to address the current crisis.
The prevailing sense of entrapment, of 'no way out' is striking. The mood of all those I've talked with today in Turkey (many) is profoundly depressed and anxious. How long before that gives way to anger, and how might that anger express itself ?
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