The Turkish Central Bank on Thursday lowered its main interest rate for the second consecutive month, from 13% to 12%, the Turkish lira at the same time reaching its lowest level against the dollar.
The Turkish currency exchanged shortly after 11:00 GMT more than 18.38 pounds for one dollar, a level never reached.
The central bank, which had already lowered its main rate by one point last month, justified its decision by citing once again uncertainties about global growth and geopolitical risks.
The Turkish president, who says he favors growth and exports over price stability, called in June for further interest rate cuts, after several months of stability.
Contrary to traditional economic theories, the Turkish president believes that high interest rates encourage inflation.
As a result of its much criticized monetary policy, the Turkish lira – which had already lost 44% of its value against the dollar in 2021 – has fallen by more than 27% against the greenback since January 1.
Interventions by the central bank and the announcement at the end of June of a support measure for the Turkish lira had little effect.
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Due to the collapse of the pound, inflation reached 80.2% year on year in August, according to official figures, the highest since 1998.
In power since 2003, first as Prime Minister and then as President, Mr. Erdogan hopes to be re-elected in the next presidential election, scheduled for June 2023.