Turkish central bank bows to Erdogan's pressure to cut rates
ABC News
Turkey’s Central Bank has unexpectedly cut the main interest rate by one percentage point, bowing to President Recep Tayyip Erdogan’s demand for lower borrowing rates to boost growth
ISTANBUL -- Turkey’s Central Bank unexpectedly cut the main interest rate by one percentage point on Thursday, bowing to President Recep Tayyip Erdogan’s demand for lower borrowing rates to boost growth.
The bank’s monetary committee cut the policy rate from 19% to 18% despite an annual inflation rate of 19.25%. Economists generally view higher interest rates as a curb on inflation but Erdogan has repeatedly said the reverse – that a high rate of interest causes price rises.
The decision sent the Turkish lira to a near-record low of 8.808 against the U.S. dollar.
Timothy Ash, an emerging markets economist for BlueBay Asset Management in London, described the move as “truly idiotic” in a note to investors.
