Turkish Central Bank Cuts Interest Rates Again After Pressure from Erdogan
The Turkish central bank has cut its key interest rate again, despite rising inflation in the country. So president Recep Tayyip Erdogan once again gets his way.
He has been pushing for a reduction in borrowing costs for some time and recently intervened again with the central bank.
The interest rate goes from 18 to 16 percent. Due to the ever-increasing price level in Turkey, according to analysts, it was actually not an obvious choice to cut interest rates, and certainly not such a strong interest rate hike. But the situation in Turkey is complicated by Erdogan’s unorthodox economic views.
According to the president, the high-interest rates cause inflation to rise. However, a common policy among economists and central bankers is to raise interest rates to control inflation.
Erdogan has already openly interfered with the affairs of the central bank on several occasions. Earlier this month, he fired three more members of the regulator’s monetary policy committee (MPC) and appointed two new ones in their place.
In the past two and a half years, Erdogan also said goodbye to three bank governors. Moreover, support for the current chairman of the central bank, Sahap Kavcioglu, also seemed to be waning in recent times.