For some of Turkish President Tayyip Erdogan's aides, the mere suggestion that the central bank should raise interest rates as the lira slides through new record lows amounts to a plot against the state. But as Laura Frykberg reports, the Turkish leader may be forced to soften his stance.
Turkey's been hit by another cold front. The lira has plunged to a new low against the euro. Attacks like the night club shooting at new year have increased political risk and slowed an economy once seen as a top emerging market. (SOUNDBITE) (English) ECONOMIST AT IS INVESTMENT, MUAMMER KOMURCUOGLU SAYING "Fitch's next meeting will be on the 27th of January. Markets now are expecting a downgrade. As you know Fitch is the last rating agency keeping Turkey in investment grade level." The Lira's value has fallen 23 percent against the U.S. dollar since the end of 2015. It's meant those who can have used the stronger currency instead. While the rest have had to struggle. (SOUNDBITE) (Turkish) RETIRED ANKARA RESIDENT, CELAL TATAR, SAYING: "Rents go up, food prices rise, unemployment increases. Our pensions stay the same and the money we get from the state loses its value." Turkey's President has been reluctant to raise rates to keep borrowing costs down. His position may thaw by the time the Central Bank meets later this month. Turkey's economy shrank 1.8 percent in the third quarter. Another quarter like that - and it's officially in recession.