Turkish PM Erdogan calls on Central Bank to cut interest rates, rules out early elections.

By bne IntelliNews April 4, 2014

PM Recep Tayyip Erdogan on Friday called on the country’s Central Bank to cut interest rates.

Markets positively reacted after Sunday’s local elections, with the Stock Exchange rallying and yields falling on the back of the election results, Erdogan said, adding that the Central Bank should convene an emergency meeting to cut interest rates. Lower interest rates will encourage investments, the PM asserted. However, Erdogan’s comments on interest rates unnerved markets. TRY first weakened against USD but recovered later in the day.

Erdogan also ruled out early general elections. There is speculation that after Sunday’s landslide victory, Erdogan may call snap polls this year. Parliamentary elections are originally scheduled for 2015. He shares President Abdullah Gul’s view that they (the PM and President) could discuss the presidential election and reach a decision, Erdogan said. Turkey’s next president will be elected in a popular vote for the first time in August. The ruling AKP’s strong showing in the local elections renewed expectations that Erdogan may consider running in the presidential race. Erdogan needs to get more than 50% of the votes in the first round on August 10, and a simple majority is required to win in the second round on August 24. Gul may replace Erdogan as the PM if Erdogan runs for the presidency.

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