(Bloomberg) —

Turkey’s President Recep Tayyip Erdogan renewed calls for lower interest rates, pushing the lira to a fresh low against the dollar and piling pressure on his central bank governor to ease policy despite high inflation.

With a vague reference to summer months as a target date, it was Erdogan’s latest intervention at the central bank, where he installed Governor Sahap Kavcioglu in March after firing the previous governor for tightening policy too much.

“I spoke with our central bank governor today. It’s an imperative that we lower interest rates. For that, we will reach July and August thereabouts so that rates can begin to fall,” the Turkish leader said in an interview with state broadcaster TRT late Tuesday.

How Erdogan’s Unorthodox Views Rattle Turkish Markets: QuickTake

The lira weakened around 3% early Wednesday to reach past 8.8 per dollar following the remarks by Erdogan, who holds the unorthodox belief that lower borrowing costs will help slow inflation, unlike what most central bankers around the world think.

The lira was 1% weaker at 8.6217 against the dollar as of 9:14 a.m. local time. The currency is the worst performer among emerging-market currencies this year, having lost more than 16% against the dollar since Erdogan fired Kavcioglu’s predecessor.

Cutting interest rates will lower producers’ costs and eventually result in slower increases in consumer prices, Erdogan said.

“If we remove the burden of interest rates from investments and costs, then we will enter a calmer environment because it’s the interest rates that cause cost inflation” in the first place, he said.

But inflation at more than three times the official target of 5% makes it impossible for Kavcioglu, the bank’s third governor in less than two years, to embark on an easing cycle just yet. Premature rate cuts in the past resulted in a weaker lira, which eventually pushed consumer prices higher, forcing the monetary authority to undo rate cuts with even bigger hikes.

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Data due Thursday will show inflation rose an annual 17.3% in May, up from 17.1% in the previous month, according to the median estimate in a Bloomberg survey of 25 analysts. More than half predicted an acceleration for an eighth month.

Under the new governor, Turkey’s central bank kept its benchmark interest rate unchanged for a second meeting last month after forecasting that inflation had reached its peak in April. Some analysts, including Barclays economist Ercan Erguzel, had contested Kavcuoglu’s prediction, saying the upswing in April “is probably not a peak.”

“The negative reaction of the Turkish lira highlights the market’s disapproval of such a likely move at a time of persistently high inflation,” said Mitul Kotecha, chief emerging Asia and Europe strategist at TD Securities in Singapore.

(Updates prices, adds context)

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