Turkish President Recep Tayyip Erdogan called on the Central Bank to continue cutting the interest rate to below 10% by the end of the year, challenging investors and economists who say raising rates is necessary to curb inflation that exceeds 80%.
The interest rate has been cut to 12%, Erdogan said on CNNTurk live, referring to an unexpected 100 basis points cut in the benchmark weekly repo rate earlier this month.
Erdogan said he hoped the monetary authorities would ensure that the key rate would fall further in October and beyond so that the benchmark rate would reach single digits by the end of the year.
Erdogan has long advocated low borrowing costs, defending the unorthodox theory that lower interest rates lead to lower inflation, which contradicts conventional policy. Over the past four years, he has fired three central bank governors in a row over disagreements over the appropriate level of interest rates. Such policies have caused the lira to fall 20% this year.