(Bloomberg) -- Turkish President Recep Tayyip Erdogan promised significantly lower interest rates by the end of the year, a week after ousting the country’s central bank chief.
“We aim to reduce inflation to one digit by the end of this year,” Erdogan told journalists in Istanbul, according to the state-run Anadolu news agency. “As we achieve this, we will achieve our year-end interest rate target as well.”
In an echo of U.S. President Donald Trump’s pressure on the Federal Reserve, Erdogan has frequently accused the central bank of keeping borrowing costs too high. Last month, he complained that while the Fed was moving toward a rate cut, Turkey’s policy rate of 24% “is unacceptable.”
On July 6, Erdogan unexpectedly dismissed Murat Cetinkaya and made it clear that he expects his replacement as central bank governor to follow the government’s line on monetary policy. Cetinkaya had held rates steady for more than nine months.
Turkish stocks and the lira declined on news of Centinkaya’s ouster. Erdogan also is at risk of U.S. sanctions after Turkey began receiving parts of a Russian-made missile defense system.
When Trump and Erdogan met at the Group of 20 summit in Japan in June, the U.S. president suggested possible leniency on sanctions. He sought to blame the Obama administration for Turkey’s decision to buy the Russian equipment, saying the impasse is “not really Erdogan’s fault.”
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