It's gonna be a bloodbath in the coming months; I doubt the government can stand until 2027.
When there was unorthodox rate cuts while inflation was raging leading to massive currency devaluation, everyone understood that the devaluation and inflation was spurred on by the rate cuts and in the opposite case both would be controlled since trust had not eroded yet. Then orthodox policies came back, devaluation slowed and inflation didn't increase and started to reverse (albeit slowly as expectations are sticky).
This meant the relationship which should hold if there's institutional trust in the economy did hold; higher rates did lead to stopping of devaluation. (As I had predicted at the time, unlike some opposition economists who predicted large devaluation despite rate hikes).
This relation doesn't always hold when there's no trust, as in the case of Argentina until a year ago, or Zimbabwe, Hungary or Weimar republic. Sometimes people become suspicious of rate hikes thinking they can reverse anytime and prefer to stay in assets which are less lucrative but safer.
The break in this relation in our country has happened already after the Imamoglu case. The only reason it hasn't translated to massive devaluation is that the tank is still half full from the previous record rates throughout the past year. But the tank is emptying faster than it can be filled now, and even more hikes will be needed but they will not have the desired effect leading to the situation getting out of control. Hyperstagflation is inevitable.
