Turkish minister urges Central Bank to cut rates on Tuesday

ANKARA - Agence France-Presse

Economy Minister Nihat Zeybekci (C) said that they expected the interest rates to be lowered as soon as possible. AA Photo

Turkey’s economy minister called on June 23 for a sharp rate cut a day before a meeting of the Central Bank.

“I don’t think anybody in Turkey will want high interest rates,” Nihat Zeybekci said.

“We expect the interest rates to be lowered as soon as possible” to the level before the big rate increase in January, he added.

The Central Bank aggressively raised key rates in January in a bid to halt a steep drop in the country’s national currency the lira.        

The overnight lending rate was set at 12.0 percent, while the borrowing and one-week repo rates were at 8.0 percent and 10.0 percent respectively.

Last month, the bank shaved its one week repurchase rate, used by commercial banks for short-term funding, from 10.0 percent to 9.5 percent.

But it was criticized for being timid by Prime Minister Recep Tayyip Erdoğan who accused the bank of “kidding the nation.”        

Turkey’s Central Bank, statutorily independent, is under pressure from Erdogan’s government to reduce rates in order to boost growth.        

Last week, the bank’s governor hinted that another small cut in interest rates was likely at today’s meeting.