Turkey’s central bank made another shock cut to interest rates, despite inflation running at a 24-year high and with the lira trading at a record low.
The Monetary Policy Committee led by Governor Sahap Kavcioglu lowered the benchmark to 12 per cent from 13 per cent on Thursday. The lira extended declines after the decision and hit a fresh low against the US dollar.
It was trading 0.3 per cent weaker against the dollar at 3.04pm UAE time.
Most economists surveyed by Bloomberg had predicted no change after an unexpected 100-basis point cut in August that ended a seven-month pause. A minority that included Morgan Stanley, UniCredit and Citigroup had forecast a cut.
In a statement accompanying its decision, the MPC said there was a “loss of momentum in economic activity due to decreasing foreign demand”.
President Recep Tayyip Erdogan and his ally Mr Kavcioglu are sticking to an unorthodox playbook that resists rate increases to contain inflation. The approach has encouraged economic growth at the expense of price stability and left Turkish assets more vulnerable to sell-offs. As a result, annual inflation has shot past 80 per cent, while the lira is among this year’s worst performers in emerging markets.
“Turkey is now entering election economics,” said Tugberk Citilci, head of research at Istanbul-based InvestAZ Menkul Degerler, who expected the 100 bps cut.
Explaining its decision to lower rates last month, the MPC said it was responding to a loss of economic momentum and did not plan to embark on a new easing cycle, saying “the updated level of the policy rate is adequate under the current outlook”.
For many economists, the messaging had suggested no additional rate cut was likely until later.
Mr Kavcioglu, in a blog post last week, repeated that macroprudential measures and policies aimed at widening the use of the lira would be used to achieve price stability. He’s the fourth central bank governor since 2019 after Mr Erdogan fired three predecessors.
The central bank, which says it remains committed to its 5 per cent inflation target, repeatedly cut rates under Mr Kavcioglu’s leadership late last year, when annual price increases were already running in double digits.
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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Director: Abdulrahman Sabbah
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Rating: 4/5
UAE currency: the story behind the money in your pockets
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The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
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UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Shooting Ghosts: A U.S. Marine, a Combat Photographer, and Their Journey Back from War by Thomas J. Brennan and Finbarr O’Reilly
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Ferrari 12Cilindri specs
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Specs
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
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The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
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More from Rashmee Roshan Lall
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The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
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Warn others to prevent further harm
Courtesy: Crystal Intelligence
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Global state-owned investor ranking by size
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1.
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United States
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2.
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China
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3.
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UAE
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4.
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Japan
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5
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Norway
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6.
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Canada
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7.
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Singapore
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8.
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Australia
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9.
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Saudi Arabia
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10.
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South Korea
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21 Lessons for the 21st Century
Yuval Noah Harari, Jonathan Cape
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
