In the past two months, Turkey’s central bank has cut its key interest rate by 200 basis points to 12%, sending markets into turmoil as inflation soared to 80% in August.
Turkish President Recep Tayyip Erdogan said today that he has advised Turkey’s central bank to further cut interest rates at its upcoming meetings. Yesterday Wednesday, moreover, he said that he expects single-digit interest rates until the end of the year.
In the past two months, Turkey’s central bank has cut its key interest rate by 200 basis points to 12%, sending markets into turmoil as inflation soared to 80% in August.
The interest rate cuts are part of Erdogan’s unorthodox policy aimed at reducing inflation, which is currently at a 24-year high, underlines the Reuters agency.
Speaking at the general assembly of the General Confederation of Professional Handicraft Traders of Turkey, Erdogan reiterated his belief that lowering interest rates will lead to a reduction in inflation. “We reduced the interest rate to 12%. Is enough; No, it’s not enough. It must be further reduced,” he stressed.
“The matter was discussed with the central bank. I underlined the need for a further reduction (of interest rates) in the upcoming meetings of the monetary policy committee”, added the president of Turkey.
Meanwhile, the Turkish lira continues to slide. After last year’s “plunge” of 44%, this year it has fallen by 29%.
“This whole situation is a ticking time bomb,” commented Ipek Ozkardeskaya, an analyst at Swissquote banking group.
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