Turkey again cuts interest rates, currency hits new low

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. The lira dropped to a new record low of 11.07 against the dollar following Thursday’s announcement, continuing a long run of losses. The rate cut comes despite soaring consumer prices that have pinched families and businesses. The Central Bank said it was reducing the policy rate to 15% from 16%, even as inflation is running at close to 20%. 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.