The Turkish Central Bank surprises the markets by cutting interest rates by 100 points… and the lira is falling.

On Thursday, the Turkish Central Bank announced a new surprise cut in the interest rate by 100 points to 12%, which plunged the lira to its lowest level ever, despite inflation rising to more than 80% and central banks around the world racing to tighten monetary policy.

The lira plunged to a record high of 18.42 against the dollar, below the level hit during the overall currency crisis in December. before rising to 18.38 by 1125 GMT.

Analysts say the monetary easing is unsustainable and comes in response to President Recep Tayyip Erdogan’s efforts to lower borrowing costs to increase exports and investment, and they expect further depreciation of the currency in the future.

Unconventional interest rate cuts over the past year, along with rising commodity prices, have pushed inflation to a 24-year high and sparked a price crisis for Turks.

The Central Bank justified this move by the continued indications of an economic slowdown, and said once again that it expects the rate of inflation to begin to decline.

“The leading indicators for the third quarter continue to point to a loss of momentum in economic activity due to lower external demand,” the bank’s policy committee said.

And 11 of 14 economists polled by Reuters expected interest rates to be kept unchanged. One expected a cut of 50 basis points to 12.50%, while two expected a cut of 100 basis points to 12%.