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President Recep Tayyip Erdogan repeated his expectations that lower borrowing costs would give a boost to Turkey’s sluggish economy, a clear signal to the nation’s central bank a week before it decides on the level of the benchmark interest rate.
“The policy rate will fall further,” Erdogan told an economy forum on Wednesday, citing the recent slowdown in consumer inflation. The Turkish president also repeated his general dislike for what he sees as elevated costs of borrowing, saying he is “allergic” to them.
Erdogan’s remarks set the tone as the central bank’s rate setting body prepares to convene on Sept. 12. The monetary authority cut its benchmark rate by more 425 basis points to 19.75% in July, only weeks after Erdogan abruptly appointed a new governor when the previous chief failed to lower rates as fast as the president would like.
Turkey’s gross domestic product must grow by 5% in 2020 — a target that the government is “going to lock down on,” Erdogan said. The economy continues a slow slog after exiting recession in the first quarter. Bank lending remains subdued. The official target of 2.3% GDP growth target for this year is widely seen as optimistic.
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