Istanbul, Turkey – Turkey’s central bank said on Thursday it had cut its main policy rate for the fourth consecutive month despite high inflation.
On the wishes of President Recep Tayyip Erdogan, the bank said it had lowered its benchmark rate from 10.5 percent to nine percent.
With the latest cut, the rate has reached “a sufficient level with regard to growing risks concerning global demand”, the bank’s council said in a written statement.
It has therefore “decided to put an end to the cycle of lowering interest rates which began in August”, it added.
Erdogan had vowed to lower interest rates to single digits by the end of the year as he prioritizes economic growth and jobs over price stability ahead of a general election next June.
Last year, interest rates fell from 19 percent in September to 14 percent in December.
They remained stable this year until the summer but have been cut every month since, while inflation has soared.
Turkey’s monetary policymakers are bucking the global trend of central banks raising interest rates to combat inflation, as high borrowing rates cool down the economy and prices.
Erdogan, a vocal opponent of higher borrowing costs, has called high interest rates his “biggest enemy”.
But the unconventional economic model has contributed to a plunge in the value of the lira.
The Turkish currency has fallen 28.5 percent against the dollar since the beginning of January, after losing 44 percent last year.
Turkish inflation surged past 85 percent in October, its highest level since 1998, official data shows.
Independent economists, however, say the actual rate is more than twice as high.