* Government exerting pressure for lower rates
* Policy meeting could be held as soon as Feb. 4
* Central bank lowers end-2015 inflation forecast (Adds Erdogan comments)
By Orhan Coskun
ANKARA, Jan 27 (Reuters) - Turkey’s central bank may hold an early monetary policy meeting next week and discuss an interest rate cut if inflation continues to fall sharply, Governor Erdem Basci said on Tuesday.
Basci, under pressure from the government to lower rates ahead of a June parliamentary election, said the bank could act as early as Feb. 4 if data due a day earlier show January inflation slowing by more than 1 percentage point.
The lira weakened to 2.36 against the dollar on his comments, reversing earlier gains after he announced a cut in the bank’s forecast for inflation this year to 5.5 percent from a previous 6.1 percent.
“We could hold a meeting to take a rapid decision,” Basci told a news conference called to announce the bank’s quarterly inflation report.
“If January inflation falls more than one (percentage) point and core (inflation) is good, we could even make an assessment on Feb. 4,” he added. The next monetary policy committee meeting is scheduled for Feb. 24.
UBS strategist Manik Narain said Basci’s comments were “very dovish” and called talk of an emergency meeting “premature” with inflation still above the bank’s 5 percent target.
“It does create some medium-term risks,” he said.
The central bank cut its main one-week repo rate last week by 50 basis points but drew a rebuke from government ministers who said it was not enough to support growth.
President Tayyip Erdogan, a vociferous advocate of lower rates, kept up the pressure, on Tuesday reiterating his assertion that high interest rates cause high inflation.
“Look at the world’s developed countries. There’s no rates policy like ours. In Japan interest rates are negative and inflation very low. If we want investment we must achieve this,” he said.
Basci said inflation could drop to its lowest in 45 years this year and said the decline was expected to accelerate from this month, approaching the 5 percent target by mid-year.
He said the midpoint of the bank’s 2016 year-end inflation forecast was 5 percent.
The lira initially firmed to below 2.34 against the dollar following Basci’s comments on inflation, from 2.3520 beforehand. But it eased back to 2.3600 by 1203 GMT after he raised the possibility of an early policy meeting.
Consumer prices fell 0.44 percent month-on-month in December for an annual rise of 8.17 percent and are expected to end this year at 6.82 percent, according to the latest central bank survey of business leaders and economists. (Additional reporting by Tulay Karadeniz in Ankara; Humeyra Pamuk, Ece Toksabay and Dasha Afanasieva in Istanbul; Writing by Daren Butler; Editing by Nick Tattersall and Gareth Jones)