Parliamentarians of Turkish President Recep Tayyip Erdoğan’s governing party expect the central bank to cut interest rates in the first half of next year, but are divided about the timing of the reductions, the Diken news website reported.
Investors in Turkey are looking ahead to a meeting of the central bank next month to gauge whether it will press on with a series of cuts to the benchmark interest rate that began in September. The rate reductions have sparked a sharp sell-off in the lira, pushing the currency to successive record lows.
One deputy of Erdoğan’s Justice and Development Party (AKP) said a space has been opened up for interest rate cuts and he expects the central bank to lower them by 2 percentage points in the New Year “to demonstrate our determination”, Diken reported.
On Monday, Erdoğan announced a series of measures designed to bolster confidence in the lira, including the introduction of Turkish lira deposits linked to the value of the dollar. The lira has since rallied to around 12.5 per dollar from 18.36 per dollar before he spoke.
On Tuesday, Treasury and Finance Minister Nureddin Nebati said there would be non turning back from the government’s low interest rate economic programme.
Another parliamentarian who is also a businessman said he expected rate cuts in the second quarter because the central bank will give time for the new “system to settle”.