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Bowing to Erdogan’s pressure, Turkish Central Bank makes risky rate cut

Turkey’s Central Bank has delivered a rate cut long sought by the president, who's counting on stimulating economic growth to patch up his sagging popular support.
BULENT KILIC/AFP via Getty Images
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Heeding President Recep Tayyip Erdogan’s politically driven pressure for lower interest rates, Turkey’s Central Bank cut its policy rate by 100 basis points to 18% Thursday despite high inflation and at the risk of further weakening the Turkish lira. 

The decision of the bank’s monetary policy committee lacked convincing economic justifications and came as a curveball for financial markets, where most analysts had expected the rate to remain unchanged at 19%. The embattled Turkish lira plunged anew after the announcement, tumbling 1.5% against the dollar to near a record low of 8.88 touched in June before regaining some ground later in the day.

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