Turkish lira drops to near record lows after Central Bank trims policy rate
The move came following pressure from the Turkish president.
Ceding to pressure from President Recep Tayyip Erdogan, Turkey's central bank trimmed its policy rate by 100 basis points to 18% on Thursday, in an apparent bid to stimulate the economy in the midst of high inflation and mounting popular discontent at giddying prices.
The embattled Turkish lira tumbled against major currencies, dipping as far as 8.74 to the dollar, a near-record low.
Most analysts were caught by surprise. “We did scent a growing risk that interest rates would be cut,” said Emre Peker, the London-based director of the Eurasia Group, a risk assessment outfit. "However, despite all the signaling, we believed the cut would not come before October due to the negative impact any cut would have on inflation expectations."
Like many, Peker said the move would further erode the central bank’s credibility. “From here on, the markets investors will be heeding Erdogan, not the [central bank governor Sahap] Kavcioglu,” Peker told Al-Monitor.
