Erdoganomics

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 7 June 2023

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

Turkey's strong-arm President Erdogan is at war with interest rates, which he's called the mother and father of all evil. But inflation is out of control and the Turkish lira keeps losing value. How did Turkey get here, and what's the plan to turn things around?

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Transcript

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0:00.0	NPR.
0:12.0	This is the indicator for planet money.
0:14.0	I'm Adrian Ma.
0:15.0	And I'm Whalen Wong.
0:16.0	Here in the US, we've been watching the Federal Reserve raise interest rates to bring down
0:19.8	inflation.
0:21.2	Every month for the last year or so, it's been this wonky guessing game of like, is the
0:25.0	Fed going to bump rates from 4.25% to 4.5% to 4.75?
0:31.0	Right.
0:32.0	It's these careful incremental increases.
0:35.0	And if you think back to this time last year, inflation in the US was running at 9%, today
0:41.0	it's below 5%.
0:43.0	So inflation has cooled off.
0:45.0	And basically, this scenario is what any traditional economics textbook would say about
0:49.1	how monetary policy gets done.
0:51.0	When inflation gets hot, a country's central bank cools it off by raising interest rates.
0:56.0	But halfway around the world, in Turkey, a completely different situation has been playing
1:01.0	out.
1:02.0	Inflation is around 40%.
1:05.0	Interest rates are at 8.5%, which is way higher than what we have in the US.
1:08.8	But still, significantly below what economists say is needed to bring down prices.
1:14.1	What makes Turkey unique is that the country's central bank hasn't been hiking interest rates.
	...

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