Turkish Prime Minister Recep Tayyip Erdogan said on Sunday that Turkey will cut interest rates sharply, a week after his decision to dismiss the governor of the central bank.
Erdogan said that Turkey aims to reduce the inflation rate from more than 15% to a single digit by the end of the year, also aimed at reducing interest rates over the same period.
The benchmark interest rate jumped to 24% in September to stem a sharp devaluation in the country's lira. The central bank has kept interest rates unchanged since then, as the economy slides into recession, to prevent new currency losses.
Economists expect the central bank, led by its new governor, Mourad Oysal, to cut interest rates by 200 basis points at the next interest rate meeting on July 25.
"We have a specific target for interest rates until the end of the year, we will do it too," Erdogan was quoted as saying. "We will cut it sharply, and once that happens, you will see inflation fall significantly."
Last week, Erdogan, who repeatedly criticized high interest rates, said he sacked former central bank governor Murat Gintinkaya because he did not follow interest rate instructions and that the central bank did not play its role correctly.