Erdogan says Turkey will make serious interest rate cuts

Turkish President Recep Tayyip Erdogan has insisted the country will apply serious interest rate cuts, a Turkish Haberturk reported on Sunday.

Erdogan, who fired the governor of the central bank last week, is targeting to reduce inflation from more than 15% to single digits by the end of the year, the newspaper reported.

Erdogan believes high-interest rate cause high inflation and has vowed to reduce the interest rate as Turkey’s benchmark interest rate was hiked to 24% last September.

The Central Bank of the Republic of Turkey (CBRT) has left the high rate since last September to prevent a sharp fall of the Lira.  Erdogan dismissed CBRT governor Murat Cetinkaya, who resisted to follow Erdogan’s instructions on rates.

Reuters reports Turkish economists expect the new governor Murat Uysal to cut rates by 200 basis points at the next rate-setting meeting on July 25.

“We have a certain target in interest rates until the end of the year. We will accomplish this too. We will reduce this in a serious way. Once this is reduced you will see inflation reduce significantly,” Haberturk quoted Erdogan as saying.

Washington’s possible sanctions on Ankara over its purchase of Russian S-400 missile system put Turkey’s dollar-denominated government bonds under further pressure on Monday.

The 2041 bond fell 1.23 cents to the dollar by to 83.44 cents, suffering its seventh straight day of losses and hitting the lowest level since June 20, Reuters mentioned.

Turkey’s Central Bank does not change policy interest rate, Lira weakens



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