Erdogan Presses Again for Turkish Rate Cut, Lira Falls
Turkish President Recep Tayyip Erdogan, his approval ratings hurt by a limping economy, ratcheted up pressure on the central bank to cut interest rates next week.
The lira slid after Erdogan repeated his unorthodox mantra that lower borrowing costs help slow the pace of price gains and stimulate the economy.
“No more high interest-rates because high interest rates would bring us higher inflation,” Erdogan told AHaber television in an interview broadcast Wednesday, ahead of the cental bank’s Aug. 12 rate decision. His second call for a rate cut in as many months sent the lira falling 0.7% to 8.5351 per dollar at 2:53 p.m. in Istanbul on Thursday.
Erdogan spoke optimistically about the economy’s future, saying it would grow more than 7% this year. He also said Turkish inflation, which climbed to 18.95% in July from 17.53% in June, will slow down after August.
“It is not possible for inflation to accelerate further from now on, because we’re transiting to lower interest rates,” Erdogan said. “I guess I am giving this signal to somewhere,” he added, without specifying.
He’s pressing his case again as the economic damage wrought by pandemic restrictions, rapid inflation and high unemployment has sharply undercut his popularity and that of the ruling AK Party he controls.
©2021 Bloomberg L.P.