Turkey's Erdogan says to bring down inflation; lira slides

Consumer inflation in Turkey rose to 19.25% in August


ISTANBUL- President Tayyip Erdogan said on Thursday that Turkey will bring inflation down as soon as possible and prevent "unreasonable" price rises, comments that sent the Turkish lira lower a week ahead of a central bank policy decision.

Consumer inflation in Turkey rose to 19.25% in August, above the central bank's policy rate of 19%, and investors have been concerned about premature monetary easing given Erdogan's frequent calls lower borrowing costs.

"We will take inflation under control as soon as possible and prevent the unreasonable price rises on the racks and price tags," Erdogan said, speaking in the central province of Kirsehir on Thursday.

The lira weakened to as much as 8.5150 to the dollar after Erdogan spoke. It stood at 8.49 at 1304 GMT, down some 0.7% on the day. 

Erdogan, a self-described "enemy" of interest rates, frequently calls for lower borrowing costs but has not mentioned that view in public speeches in recent weeks.

Last week, Central Bank Governor Sahap Kavcioglu said policy was tight enough to bring down inflation, and stressed the importance of core inflation, which remains below headline inflation and the policy rate.

The Turkish lira recorded its largest intraday drop since May following Kavcioglu's comments as economists perceived them as signaling monetary easing in the short-term. 

But most economists still expect the bank to keep its policy rate unchanged at a policy meeting set for Sept. 23, according to a Reuters poll. 

(Reporting by Tuvan Gumrukcu and Ali Kucukgocmen; Editing by Jonathan Spicer) ((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen; +905319306206; Reuters Messaging: Reuters Messaging: ali.kucukgocmen.thomsonreuters.com@reuters.net))

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