Erdogan calls for interest rates cut, lira drops sharply

Loses over 3% against USD, rises after Central Bank move

13 September, 14:48

    (ANSAmed) - MILAN, SEPTEMBER 13 - Turkish president Recep Tayyip Erdogan has spoken out against a rise in interest rates, claiming that it is a cause of inflation in the country. The lira immediately dropped by 3% against the dollar, only to surge back up and gain ground against it on Thursday after Central Bank's move to raise interest rates. Erdogan's words sounded like an attack on the country's Central Bank on the day when it was just about to rise interest rates to curb the 17.9% inflation rate seen in August. ''I have never seen the Central Bank get its year-end inflation forecasts right,'' Erdogan said after ten days ago when the bank announced it would be adjusting its monetary policy in light of ''significant risks to price stability'' generated by inflation deterioration. ''This is not a crisis, it is a manipulation,'' the Turkish president said, who continues - against longstanding ideas in economics - to hold that inflation is an effect of interest rates and not the contrary, stressing that ''those who say the opposite do not know the subject''.

    Erdogan ensured, in any case, that the Central Bank ''is independent and will make its own decisions autonomously''.


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