Turkey slashes interest rates again

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Turkey's central bank lowered its main interest rate by two percentage points to 12 percent on Thursday. — AFP
Turkey's central bank lowered its main interest rate by two percentage points to 12 percent on Thursday. — AFP

ANKARA — Turkey's central bank lowered its main interest rate by two percentage points to 12 percent on Thursday — the fourth drop since its boss was replaced in July, and a deeper cut than analysts had expected.

The rate has halved from 24 percent in that time, as inflation has come under control.

Consumer price inflation stood at 10.56 percent year-on-year in November, higher than the October figure of 8.55 percent, but still much improved on the 20-25 percent range seen in the second half of 2018.

"Thanks to the stable course of the Turkish lira as well as the developments in domestic demand conditions and producer prices, core inflation indicators have displayed a mild trend," the central bank said in a statement.

Following a brief but politically damaging recession at the end of last year, President Recep Tayyip Erdogan has set an ambitious target of 5 percent growth for 2020, and is relying on extensive credit to achieve it.

Erdogan also takes the unorthodox view that high interest rates create high inflation, describing them as the "mother and the father of all evil".

He fired central bank governor Murat Cetinkaya in July, reportedly because the two men clashed over reducing rates. — AFP


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