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.
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.
