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PM Erdogan urges Turkish Central Bank to cut rates

Business Materials 4 April 2014 16:44 (UTC +04:00)

Turkish Prime Minister Recep Tayyip Erdogan called on the Central Bank on April 4 to cut interest rates in order to stimulate the economy after months of political crisis Hurriyet Daily News reported.

"The central bank should hold an extraordinary meeting to cut (interest rates) ... just as they met previously to raise them," Erdogan told a press conference.

The central bank, which is officially independent, aggressively raised its key interest rates in January in a bid to stem a steep drop in the country's national currency the lira.

The overnight lending rate is now 12.0 percent, while the borrowing and one-week repo rates are at 8.0 percent and 10.0 percent respectively.

The January hike came amid an escalating political crisis for Erdogan sparked by a graft probe targeting his inner circle, months after the country was also rocked by mass anti-government protests.

Erdogan -- who has made a turnaround in Turkey's economic fortunes a keystone of his 11-year rule -- on Friday again pushed for lower rates that would boost credit available for consumers and businesses.

"Investors in Turkey will be eager once interest rates are lowered. More investments will be made," said the prime minister, adding that "we are doing quite well right now in economic terms".

Turkey's economy grew by 4.0 percent last year, official data showed this week, but analysts warned of a slowdown after months of turmoil and ahead of presidential elections in August and legislative polls next year.

Emerging economy currencies including Turkey's have also taken a beating due in part to the US Federal Reserve's decision to reduce stimulus measures, which curbs the attractiveness of markets that had offered higher returns.

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