Turkish central bank mulls policy changes amid currency drop

September 13, 2018 - 3:57 am

ANKARA, Turkey (AP) — The Turkish central bank is discussing possible changes to its monetary policy amid broad concerns over the weakening currency.

The bank said earlier this month that it would adjust its monetary policy, raising hopes that it will increase interest rates on Thursday.

Independent experts say Turkey should increase rates to help stem the selling pressure on the currency, as higher returns would entice international investors. The bank has, however, come under pressure from President Recep Tayyip Erdogan to keep interest rates low to encourage economic growth.

The Turkish currency has plunged some 40 percent against the dollar this year over concerns about Erdogan's economic policies and an ongoing diplomatic and trade dispute with the United States over the detention of an American pastor on espionage and terror-related charges. Washington imposed sanctions on two government ministers and doubled tariffs on steel and aluminum imports from Turkey.

Turkey's annual inflation has jumped to nearly 18 percent while economic growth has slowed to an annual rate of 5.2 percent in the second quarter, from the first quarter's 7.4 percent.

In a bid to shore up the Turkish lira, Erdogan's government issued a decree on Thursday banning the use of foreign currency in the sale and renting of property and the leasing of vehicles.

According to the decree, all sales and rental contracts agreed in foreign currency will be converted to Turkish lira.

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