Cheap home loans raise Turkey’s inflation roof

Turkish President Tayyip Erdogan speaks through a news convention in Kyiv, Ukraine, February 3, 2022. REUTERS/Valentyn Ogirenko/File Picture

LONDON, Might 10 (Reuters Breakingviews) – Tayyip Erdogan’s latest inflation gambit will do additional damage than excellent. The Turkish president on Monday announced browse much more strategies to curb growth in home rates after an index proposed they doubled over the previous calendar year go through extra . Building firms will get three years of affordable credit for housing projects provided they hold costs for a 12 months. That could help. On the other hand, Erdogan also promised cheap loans to some property potential buyers. Annualised, the 11% level on present is nicely below the central bank’s worryingly minimal 14% benchmark lending level.

The handouts are odd provided the function played by low-priced credit rating in Turkey’s recent financial mess. Inflation strike 70% browse additional in April soon after a sequence of charge cuts instigated by Erdogan. U.S. financial tightening has put additional tension on the lira, which is now buying and selling at 15 to the dollar, tracking back in the direction of December’s peak of 18. That weak spot will stoke inflation. Low cost home loans just make matters worse. (By Dasha Afanasieva)

(The writer is a Reuters Breakingviews columnist. The thoughts expressed are their possess.)

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