Between 2021 and 2023, Recep Tayyip Erdoğan bet that cutting interest rates fights inflation. With the Selic now under debate in Brazil, the Turkish precedent has become an argument on both sides.
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The Turkish experiment
Erdoğan has always argued that high interest rates cause inflation, the opposite of conventional economic theory. Under his pressure, Turkey’s central bank cut its policy rate from about 19% in 2021 to 8.5% in early 2023, while inflation hit 85% the year before. The way was paved by dismissals: three central bank governors who resisted the pressure were removed. Naci Ağbal, for example, was fired by decree after four months in office, during which he raised rates and won praise from investors. In October 2021, Erdoğan also fired two deputy governors and a member of the monetary policy committee, two of whom had opposed the latest cut.
Erdoğan
The result was a historic currency crash in 2021 and inflation at a 24-year high, above 85%. The central bank burned through billions of dollars in reserves trying to prop up the lira.
The reversal
After Erdoğan’s 2023 reelection, the central bank nearly doubled rates to 15% in June, reversing nine cuts since late 2021, and by September it had raised the rate to 25% from 8.5%. Today, Turkey is slowly reaping the fruits of orthodoxy: in October the central bank cut its rate from 37% to 36%, its first cut since January, after annual inflation fell to 29.73%, the first time below 30% since November 2021.
Brazil and Turkey side by side
Turkey (2021-23)
Brazil (today)
Policy rate
Cut from ~19% to 8.5%
13.75%, held unanimously by Copom on 4 Nov
Inflation
Rising, up to 85%
4.62% over 12 months, above the 4.5% ceiling
Who decided
The president, firing officials
An economist’s proposal, no decision yet
Reserves
Burned to defend the lira
~US$350 billion, according to the proposal
In Brazil, 12-month inflation rose from 4.5% to 4.62%, above the ceiling of the target, and Copom interrupted a cycle of five consecutive cuts that began in March 2026. With the Selic at 13.75%, Brazil’s real interest rate is very high, around 9 points by simple subtraction. That is the argument of those who want to cut: there is room, and the cost of the debt weighs heavily.
What critics see as similar
André Lara Resende
The parallel worries critics because André Lara Resende’s design also touches the independence of the Central Bank. Under the proposal, the Selic would stay within a band set by a new National Fiscal and Monetary Council, and international reserves would be used to face currency pressure during the transition. For critics, subordinating monetary policy to debt-cost objectives resembles the Turkish model. Economists interviewed by Times Brasil point to risks of inflation, capital flight and currency pressure, and Sérgio Vale cites Brazil’s own 2012 precedent, when inflation rose to the 6.5% ceiling.
What defenders answer
Defenders of the idea would say the differences are large. Turkey cut rates with inflation soaring and without fiscal targets; Lara Resende proposes a gradual decline over 12 months tied to coordinated fiscal targets. Brazil has robust reserves, and its public debt is mostly in reais, which reduces the risk of a currency collapse spilling into the debt, as happens in countries with dollarized debt (this last point is general context, not from the sources). They also note that Lara Resende himself admits inflation may rise at first.
A reading
Two differences seem decisive: the starting point for inflation and institutional credibility. Turkey lost both at once. Brazil still has its reserves and moderate inflation, but already shows signs of distrust: the dollar rose after the election and Copom cited the exchange rate when holding the Selic. The Turkish lesson may be less “never cut rates” and more “do not cut without convincing the market that inflation will stay under control.” It was when Turkey regained that argument, from 2023, that inflation began to ease, though slowly.
Brazil and Turkey differ in economic structure, debt, political regime and geopolitics, so the comparison is a compass, not a forecast.
Sources: AP, Bloomberg/AGBI, Al Jazeera, Hispanatolia, Agência Brasil and Brazilian press on Copom’s 4 November decision, Times Brasil, Brasil 247 (Folha de S.Paulo).
