The USD/TRY pair rose by 0.5%, and updated the maximum of 2022, which was due to expectations of the results of the meeting of the Central Bank of Turkey. In general, since the beginning of this year, the USD/TRY pair has risen by more than 19%.
Economists expect the Central Bank to keep the interest rate at 14% again. The last time the rate was revised at the December meeting - then it was reduced by 1%.
According to official data, Turkey's consumer price index in April increased by 69.97% per annum compared to 61.14% per annum in March. The annual inflation rate in Turkey is the highest since Erdogan's ruling Justice and Development Party came to power in the fall of 2002. The rise in inflation is largely due to the unconventional economic thinking of the President of the country. Erdogan has put pressure on Turkey's nominally independent Central Bank to start lowering interest rates, while financial regulators around the world are doing the opposite in the fight against rising inflation.
Economists note that deepening trade imbalances and the most negative interest rates in the world (adjusted for inflation) have made the Turkish economy increasingly vulnerable during the strengthening cycle of global policy tightening led by the Fed.