Turkey again cuts interest rates despite pinch of inflation

ANKARA, Turkey (AP) — Turkey’s Central Bank has cut interest rates by 1 percentage point a day after President Recep Tayyip Erdogan spoke out against high borrowing rates. It comes despite soaring consumer prices that have pinched families and businesses. The Central Bank’s monetary committee announced Thursday that it was reducing the policy rate to 15% from 16%, even as inflation running at close to 20%. The lira dropped to around 10.89 against the dollar following the announcement, continuing a long run of losses. The lira has lost more than 30% of its value since the start of the year, severely eroding Turkish consumers’ purchasing power. Contrary to traditional economic theory, Erdogan argues that steep interest rates cause inflation.