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President Recep Tayyip Erdogan said Turkey will lower interest rates to single digits soon and inflation will follow suit.
“We are lowering and will lower interest rates to single digits in the shortest period,” Erdogan said in a televised speech on Sunday. “After it falls to single digits, inflation will also slow to single digits.”
The drop in inflation after rate cuts is an apparent reference to Erdogan’s personal belief that price gains slow when the cost of borrowing is reduced. Most economists think the opposite is true.
Erdogan’s comments come a day after he said he believes the central bank will lower interest rates when its monetary policy committee meets on Thursday. The president sacked the central bank governor in July for failing to live up to his expectations for rapid cuts to interest rates. The new governor delivered a 425 basis-point cut to the benchmark rate in the first meeting he chaired. The rate now stands at 19.75%.
The lira jumped 2.1% in the five days through Sept. 6, its first weekly gain since Aug. 9.
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