ANKARA, Turkey (AP) — The Turkish lira hit new record lows against the dollar on Thursday after President Recep Tayyip Erdogan fired senior central bank officials, heightening concerns over the Turkish leader’s interference in the bank’s activities.
Erdogan dismissed deputy central bank governors Semih Tumen and Ugur Namik Kucuk as well as Abdullah Yavas, a member of the bank’s monetary policy committee, according to the Official Gazette. He appointed Taha Cakmak as a deputy governor and Yusuf Tuna as a member of the monetary policy committee.
Turkish media reports said Kucuk had opposed the bank’s decision last month to cut the main interest rate by one percentage point, bowing to Erdogan’s demand for lower borrowing rates to boost growth.
Economists generally view higher interest rates as a curb on inflation but the Turkish president has repeatedly said the opposite — that a high rate of interest causes price rises.
The lira weakened by 1% overnight to reach 9.19 against the dollar. It was trading at 9.14 against the dollar early on Thursday. The lira has lost some 19% of its value since the start of the year.
The shakeup of the bank officials came hours after Erdogan met with the bank’s governor, Sahap Kavcioglu.
Kavcioglu is the fourth appointee to the role since 2019 amid concerns over the bank’s independence. He had kept the interest rate at 19% since taking office in March. Erdogan called for a cut in rates in August.
The Turkish economy never fully recovered from a 2018 currency crisis when it was hit by the coronavirus pandemic, causing growing inflation and unemployment.7 Stocks to Buy That Will Benefit From Inflation
There are two narratives that are getting conflated when it comes to inflation. The first is whether or not inflation is occurring. And the second is whether inflation will get out of control.
To the first point, the clear answer is absolutely. There are price increases in everything from commodities to semiconductor chips. And even though lumber prices have gone down it’s a good bet that many consumers will put off their deck projects for another day.
And, of course, inflation numbers tend to strip out gas and groceries – but those are precisely the areas where consumers feel inflation the most. Inflation is real.
But is this just “transitory” as many analysts and the Fed itself claim? Or is it only the beginning of something much worse? The answer to those questions is probably above our pay grade.
As an investor, the inflation narrative only changes where you allocate your investment dollars. And for the most part, you’re probably only looking at a small percentage of your portfolio.
However, the first rule of investing is to not lose money so it’s important to identify companies that can provide a hedge against inflation – transitory or otherwise.
That’s the focus of this special presentation. Right now there are many strong companies that benefit when inflation is on the rise.
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