Erdogan hopes Turkey will lower interest rate to single digit until the end of the year

Turkish President Tayyip Erdogan announced on Wednesday that Turkey will cut further policy rates, President Tayyip Erdogan said on Wednesday, repeating his unorthodox view that lower interest rates will lead to lower inflation.

He also said he hopes the central bank will bring down the rate to single digits by year-end.

Erdogan made those remarks in a televised interview with Turkey’s CNN Turk TV, calling on the industrialists to make investments, taking advantage of low rates. 

“The interest rate has been lowered to 12%,” Erdogan said, referring to a shock 100 basis-point decrease in the benchmark policy rate earlier this month. “From now on there is no going up, it will fall further. That will also reduce inflation.” 

Erdogan has long supported an unorthodox theory that low borrowing costs will result in lower inflation, the opposite of conventional policy. He has fired three consecutive central bank governors and two finance ministers in the last four years over disagreements about his economic policy.