Turkish Lira Declines Following Erdoğan's Interest Rate Statements

Investing.com -- The Turkish lira drew attention on Monday as the worst-performing currency among emerging market currencies. This situation arose as a result of President Recep Tayyip Erdoğan's recent statements regarding interest rates, which have triggered concerns about a return to unconventional monetary policies in the past.
The lira depreciated by 0.6% against the dollar, resulting in an approximate 16% loss since the beginning of the year. In contrast, the MSCI Emerging Markets Currency Index showed little change on Monday, with only a slight decline projected for 2024.
President Erdoğan made a statement indicating that interest rates will definitely decrease next year, adding, "2025 will be a turning point in this regard." This comment came after the Central Bank of Turkey's first policy rate cut since 2023.
Despite officials' warnings against a continuous easing cycle, analysts are now predicting interest rate cuts at every policy meeting in 2025.