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Turkey’s Central Bank caves on interest rates

Under fire from the government and the president, Turkey’s Central Bank has abandoned its cautious approach and moved to lower interest rates.
Turkey's central bank governor Erdem Basci addresses the general assembly of the bank in Ankara April 17, 2014. Turkey's current account deficit to gross domestic product (GDP) ratio was expected to be between 5-6 percent at the end of 2014, Basci said on Thursday.   REUTERS/Umit Bektas (TURKEY - Tags: POLITICS BUSINESS HEADSHOT) - RTR3LO49
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Exasperated with long-standing political pressure, Turkey’s Central Bank seems to have caved in, moving to meet the demands of the president and the government to lower interest rates.

At its Jan. 20 meeting, the Central Bank’s Monetary Policy Committee lowered the benchmark one-week repo rate from 8.25% to 7.75%. The cut, however, failed to satisfy President Recep Tayyip Erdogan and the government. The Central Bank remained under fire. His back to the wall, Gov. Erdem Basci broke with tradition to announce days in advance that a further cut was likely on Feb. 4.

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