Reuters: Turkish Inflation Eases Amid Aggressive Monetary Policy

Article published: 3 November 2023

IB Economics Syllabus: Macroeconomics (inflation, monetary policy)

In a significant economic development, Turkey’s annual consumer price inflation recorded a slight decrease to 61.36% in October, the first decline in three months, as reported by Reuters. This change reflects the easing impact of the lira’s depreciation and post-election tax hikes. However, this is still considered extremely highe, so in response, the central bank has aggressively raised its key interest rate to 35%, marking a substantial shift in monetary policy aimed at stabilizing the economy amidst ongoing inflationary pressures.

IB Economics (IA) Commentary Suggestions:

For your IA, analyze the Turkish Central Bank’s monetary policy using the money supply diagram and the AD/AS model. Focus on the impact of interest rate hikes on inflation and the broader economy, exploring the concept of policy intervention in economic management.

Source of image: Reuters/Dilara Senkaya

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