Turkey: Erdogan promises interest rates cut to single digits

Turkish president Recep Tayyip Erdogan promises interest rates cuts up to single digits soon.

Inflation should follow according to Erdogan as he commented: “After it (interest rates) falls to single digits, inflation will also slow to single digits.”

This is in direct contradiction with mainstream economy or with reality where for example ECB uses interest rates cuts to speed up inflation. Vast majority of economists around the globe disagree with Erdogan and his claim. Slower inflation after rate cuts is one of Erdogans personal beliefs as he claims that lower borrowing costs leads to lower price gains.

Turkish central bank board members will meet on Thursday. It is very likely that current situation on global markets combined with pressure coming from Erdogan will convince the board to cut the interest rates.

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