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The Editors

Turkey Can’t Defy the Laws of Economic Gravity

Pressure on the central bank to keep cutting rates has fueled inflation and pummeled the lira. It’s still not too late to reverse course.

Turks are waiting in bread lines as prices skyrocket.

Turks are waiting in bread lines as prices skyrocket.

Photographer: Yasin Akgul/AFP/Getty Images

President Recep Tayyip Erdogan of Turkey has spent much of the past year seeking and failing to defy economic logic. For the sake of Turkish businesses and consumers, not to mention his own political future, it’s time to reverse course.

Contrary to most orthodox economists, Erdogan has long been convinced that raising interest rates — which he has described as the “mother and father of all evil” — encourages rather than discourages inflation. He has cycled through key officials who disagree with him, including two finance ministers and three central bank governors in the past three years. Even with prices skyrocketing and the lira plummeting, the central bank dutifully slashed rates another 500 basis points between September and December. To persuade citizens to hold onto their eroding lira deposits, the government recently promised to compensate them for any further falls in the currency against the dollar.