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President Recep Tayyip Erdogan said the Turkish government is committed to reduce interest rates and inflation to single digits, sounding more willing to lower borrowing costs than his current central banker.

The Turkish president also said that he plans to move forward with his contentious proposal to dig a strait through Istanbul to bypass the congested Bosphorus Strait, which connects the Black and Marmara seas.

“We are determined to bring inflation, which has recently accelerated, down to single digits,” Erdogan said, addressing lawmakers of the ruling AK Party in Ankara on Wednesday. “We are also determined to reduce interest rates to single digits.”

The president went on to say that the lira’s recent decline has no economic basis.

The lira continued to fall after Erdogan spoke a week before the central bank’s first rate-setting meeting under its new governor. Since Naci Agbal was fired as head of the monetary authority on March 20 and replaced by Sahap Kavcioglu, the currency has lost 12% against the dollar.

Former AK Party lawmaker Kavcioglu has said repeatedly that he would not rush to lower the benchmark rate from its current 19 percent.


The multibillion-dollar Canal Istanbul project, which was first announced a decade ago, has become a hot topic in recent weeks after more than 100 retired admirals accused of plotting a coup against him voiced their opposition to it. They are concerned that the massive project will jeopardize a 1936 treaty that controls the Bosphorus and is intended to ensure regional stability.

Following his remarks, shares of state-run REIT Emlak Konut increased by as much as 4.7 percent, while shares of Akcansa Cimento AS, a joint venture between HeidelbergCement and Sabanci Holding, increased by as much as 9.9 percent.

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Erdogan has confirmed that Turkey would not withdraw from the treaty, but sees the Canal Istanbul as a viable alternative.

–With the aid of Firat Kozok.


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