Turkish lira drops to new low after harsh interest rate cut

ISTANBUL (AP) — The Turkish lira has plunged to a record low against the U.S. dollar after a harsher-than-expected cut in interest rates. The decision Thursday by the Central Bank’s monetary committee to cut the rate from 18% to 16% surprised analysts. The lira dropped to 9.45 to the dollar, compounding a long run of losses. The cut, which came as inflation stood at nearly 20%, will be seen by many as further evidence of the bank’s lack of independence from the government of President Recep Tayyip Erdogan. Contrary to traditional economic theory, the president has said steep interest rates cause inflation.