Erdogan says Turkey will make serious interest rate cuts: broadcaster

[ISTANBUL] President Tayyip Erdogan said Turkey will make serious cuts to interest rates, broadcaster Haberturk reported on Sunday, a week after he replaced the governor of the central bank.

Mr Erdogan said Turkey aimed to reduce inflation from more than 15 per cent to single digits by the end of the year and also had a target for interest rates over the same time period, Haberturk said.

Turkey's benchmark interest rate was hiked to 24 per cent last September to stem a sharp fall in the lira. The Central Bank has left it unchanged since then, as the economy tumbled into recession, to prevent renewed losses in the currency.

Economists expect the central bank, under new governor Murat Uysal, to cut rates by 200 basis points at the next rate-setting meeting on July 25.

"We have a certain target in interest rates until the end of the year. We will accomplish this too," Haberturk quoted Mr Erdogan as saying. "We will reduce this in a serious way. Once this is reduced you will see inflation reduce significantly."

Last week, Mr Erdogan, a frequent critic of high interest rates, said he had dismissed the previous central bank governor Murat Cetinkaya because he failed to follow instructions on rates and the bank had not properly fulfilled its role.

REUTERS