The lira’s fall and what it means for inflation and rates

The fall in the Turkish lira seen in the past few weeks doesn’t look large enough (yet) to prevent inflation from easing later in the year and to prompt a monetary policy response, not least given that government pressure for looser policy seems to be building. But if past form is anything to go by, a further drop in the currency, to about 4.25/$, in the next week or two would probably trigger interest rate hikes.