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Erdogan says Turkish interest rates will fall ‘markedly’ until elections

Turkey’s interest rates will continue to fall, President Recep Tayyip Erdogan said, making a case for an economy freed from dependence on short-term foreign cash and transformed into one that thrives on local production and exports.

Cheaper money will boost manufacturing, create jobs and slow consumer inflation currently running at four times the official target of 5 percent, and the currency will eventually strengthen, Erdogan said in an interview with state broadcaster TRT on Tuesday.

Turkey won’t try to attract capital flows that leaves its economy at the mercy of “hot money, or investments that can be quickly withdrawn, Erdogan said. His pledges put the Turkish central bank in an awkward position after monetary policy makers said they would assess ending interest rate cuts as early as December.

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Even so, the Turkish lira lost almost 28 percent of its value since the bank started its current easing cycle in September and lowered the benchmark rate down by 4 percentage points to 15 percent.

“Our country has now come to the point of breaking this vicious cycle, and there is no turning back from here, Erdogan said.

The lira extended losses after Erdogan’s remarks, falling as much as 8.1 percent against the US dollar. It was trading 6.4 percent lower at 13.7058 per US dollar as of 11:07 p.m. in Istanbul.

Price shocks

Erdogan unveiled his most recent policy stance a little over a week ago, pushing for lower interest rates to turbo-boost growth and revive his flagging popularity ahead of the 2023 vote.

Pushing for lower borrowing costs is hardly new for the Turkish president, whose proposition that cheaper money slows inflation defies mainstream economics. Driving credit-fueled growth before elections has worked for him in the past.

The accumulating impact of that policy, rising income inequalities and the damage wrought by Covid means the potential social costs are much bigger this time. Price shocks resulting from the lira’s freefall are making life more expensive in the nation of 84 million.

Continuing old policies based on “false premises would only exacerbate those problems, Erdogan said.

“The high interest rate policy imposed on us is not a new phenomenon, he said. “It is a model that destroys domestic production and makes structural inflation permanent by increasing production costs. We are ending this spiral.

The government is working on two support programs aimed at creating 50,000 new jobs to mitigate the short-term volatilities, the Turkish leader said.

Private companies will get 50 billion liras ($3.7 billion) in new loans under one of the programs supported by the Credit Guarantee fund. Interest rates on the loans will be as much as 7 percentage points lower than the market levels, contributing to an estimated growth of 10 percent in Turkey’s gross-domestic product this year, Erdogan said.

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Credit Suisse managers could face disciplinary action, Swiss regulator says


Swiss financial regulator FINMA said it was considering whether to take disciplinary action against Credit Suisse managers after Switzerland’s second largest bank had to be rescued last week by UBS.
FINMA President Marlene Amstad told Swiss newspaper NZZ am Sonntag it was “still open” whether new proceedings would be started, but the regulator’s main focus was on “the transitional phase of integration” and “preserving financial stability.”

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UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.26 billion) in stock a week ago and to assume up to 5 billion francs in losses in a merger engineered by Swiss authorities during a period of market turmoil in global banking.
Credit Suisse on Sunday declined to comment on the FINMA President’s comments when asked by Reuters for a response.
Asked whether FINMA is looking into holding current Credit Suisse managers accountable for the collapse of Switzerland’s second-largest bank, Amstad said it is “exploring the options”.
“CS had a cultural problem that translated into a lack of responsi-bilities,” Amstad was quoted as saying by NZZ, adding: “Numerous mistakes were made over several years”.
FINMA had conducted six public “enforcement proceedings” against Credit Suisse in recent years, Amstad said.
“We have intervened and used our strongest instruments,” she said of its previous moves.
Amstad also defended Switzerland’s decision to write down 16 billion Swiss francs of Credit Suisse Additional Tier 1 (AT1) debt, to zero as part of the forced rescue merger.
“The AT1 instruments contractually provide that they will be fully written off in the event of a trigger event, in particular the granting of extraordinary government support,” Amstad said.
“The bonds were created precisely for such situations.”

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Aramco affirms support for China’s energy security


Saudi Arabian oil giant Aramco affirmed on Sunday its support for China’s long-term energy security and development, the company’s CEO Amin Nasser said in remarks made before a forum in Beijing.

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Nasser said that the company has partnerships and emission-reducing technologies with China to make lower carbon products.

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Kuwait Oil Co dealing with ‘limited fire’ at well where oil leak occurred last week

Oil prices hit lowest in 15 months on banking fears

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Kuwait Oil Co dealing with ‘limited fire’ at well where oil leak occurred last week


Kuwait Oil Company said on Sunday it is dealing with a “limited fire” that erupted at a well where oil leaked last week.
The company said in a statement that no injuries had been reported at the scene.
“The company’s operations in the area have not been affected,” the statement read.
Kuwait Oil Company declared a state of emergency last Monday due to an oil leak in the west of the country.

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