Erdoğan says Turkish interest rates likely to fall further

Turkish President Recep Tayyip Erdoğan on Saturday said he believes the central bank will cut interest rates when its monetary policy board meets on Thursday.

“The monetary policy board meets on Thursday. I believe interest rates will fall further,” state-run news agency Anadolu quoted Erdoğan as saying. 

The statement from the Turkish president, who is known for his criticism of high interest rates and calls for lower borrowing costs to boost economic activity, arrives following a move by the central bank to slash its key interest rate by 425 basis points to 19.75 percent last month. 

“As interest rates fall, inflation will downgrade too, you will see,” Erdoğan said in a speech in Turkey’s central province of Eskişehir. 

Inflation in Turkey has slowed to 15 percent in August from 25.2 percent in October, a fifteen-year high, opening the way for more rate cuts. Economists say that a severe economic slowdown in the country, which has depressed domestic demand, could mean inflation eases to single digits by October before accelerating again.

The central bank is likely to cut interest rates by at least two percentage points to 17.75 percent at this week’s meeting, according to report published on Tuesday by Inan Demir, an economist at Nomura in London.
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