Erdogan Says He Told ‘New Friend’ at Central Bank to Cut Rates

(Bloomberg) --

Turkish President Recep Tayyip Erdogan has a lot to show for installing a new central bank governor after firing his predecessor for not lowering interest rates.

“We fired the previous central bank governor because he wouldn’t listen and we have decided to move on with our new friend,” Erdogan said in a speech at parliament in Ankara Tuesday. Erdogan said he told the new governor that “we are going to lower interest rates.”

Governor Murat Uysal has delivered a bigger-than-forecast cut all three times that he’s reduced rates since Erdogan appointed him in July, bringing the cumulative easing under his watch to 10 percentage points -- including a record move in his first month on the job.

Long a believer that high interest rates cause inflation, Erdogan’s distaste for high rates has also been linked to Islamic proscriptions on usury. In his view, producers have to pass on their higher borrowing costs to customers, so they raise prices.

©2019 Bloomberg L.P.

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