The Lira lit the fire. Indexation, expectations and lost credibility are keeping it alive - FXStreet
The Lira lit the fire. Indexation, expectations and lost credibility are keeping it alive - FXStreet
Source: FXStreet
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DW NOTE
Turkey's inflation spiral isn't a lira problem that can be solved with lira tools. When wages, rents, and contracts automatically adjust upward every month, rate hikes don't cool demand — they just feed the indexation loop. The central bank lost credibility years ago by subordinating monetary policy to political cycles. Now every actor in the economy prices in perpetual debasement, and that expectation becomes self-fulfilling. You can't anchor inflation with a 50% policy rate when nobody believes you'll keep it there past the next election.