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Turkish lira notches more record lows on rate-cut concerns

Category: Economy

Date: 2021-10-15T12:50:12+0000
Turkish lira notches more record lows on rate-cut concerns

Shafaq News/ Turkey's lira touched new lows against the dollar and euro on Friday, hamstrung by worries over more interest rate cuts despite high inflation, after President Tayyip Erdogan dismissed three central bank policymakers.

Two of the three monetary policy committee (MPC) members ousted on Thursday were seen to oppose the bank's 100 basis-point rate cut to 18% last month, and their dismissal clears the way for more policy easing as soon as next week.

A survey by the central bank showed market participants expected the rate to hit 16.6% in three months, representing cuts of 140 basis points, while inflation expectations rose.

The lira lost as much as 0.5% to hit an all-time low of 9.24 against the U.S. currency. It stood at 9.2380 at 0935 GMT and has weakened more than 19% so far this year.

It also touched a record 10.7235 against the euro, according to Reuters.

Analysts viewed the latest central bank personnel changes as fresh evidence of political interference by Erdogan, a self-described enemy of interest rates who frequently calls for monetary stimulus.

The bank's next policy meeting is on Oct. 21.

According to initial results of a Reuters poll, most economists expect a rate cut next week and some may respond to the MPC shakeup by predicting a more aggressive easing.

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