The big news, of course, is that the Turkish central bank yesterday announced a 425bp rate hike, to stem a currency crisis. There is FT Alphaville on the move here, more readings here. The markets seem to like this move, at least at first, but based on what we know from the literature, we should not be too quick to think this will succeed.
I did quite well in Econ 101 and quite badly in Econ 102, so I've never really understood monetary policy. Hence, I've been puzzling over the Turkish rate move. Naturally, the MSM fails to explain the background. But blogs do. Tyler Cowen links to a bunch of papers on the effect of raising interest rates on currency valuation.
