Lira Slumps as Erdogan Adds to Rate-Cut Angst Before Decision
(Bloomberg) -- Turkey’s lira tumbled to a record low after President Recep Tayyip Erdogan vowed to fight against interest rates, bolstering speculation the central bank will cut borrowing costs again on Thursday, even as inflation quickens.
The lira dropped for a seventh day, losing as much as 3% to 10.6364 against the dollar. It is headed for its longest streak of declines in a month, having closed below the psychologically important level of 10 per dollar every day this week.
“We will lift the interest rate burden from citizens,” Erdogan said in an address to his party on Wednesday, repeating his unorthodox mantra that interest rates are the cause of higher consumer prices. Inflation is running just shy of 20%, a level last seen in the wake of a currency crisis three years ago.
Still, economist expect policy makers will cut the benchmark one-week rate by 100 basis points, pushing yields further below zero. They have cut the rate by 300 basis points to 16% since September, spurring the biggest currency depreciation in emerging markets this year.
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