* Erdogan says Turkey’s rates will be lowered * MSCIEF snaps 3-day winning streak * Short-term volatility in EM FX will linger - Reuters poll * Czech c.bank expected to hike rates by 25 bps Aug 5 (Reuters) - Turkey’s lira sank 1% on Thursday on rate cut fears, while a hawkish tone from a top U.S. Federal Reserve official sent an index of emerging market shares lower for the first time in four sessions. The lira was set to post its worst session in seven weeks after President Tayyip Erdogan said interest rates will be lowered, even as inflation gets dangerously close to the benchmark interest rate of 19%. “The lira may suffer should rates policy increasingly loosen in real terms, as the central bank governor had previously promised to hold rates above expected and actual inflation,” said Dennis Shen, director, sovereign and public Sector, Scope Ratings. Erdogan’s opposition to high rates has seen the lira lose 13% so far this year, the worst performing EM currency, with the ouster of a hawkish central bank chief earlier this year serving a severe blow. The central bank meets next week, and while the market expects the bank to stay on hold, Erdogan’s interference causes uncertainty. Moves in other EM currencies were limited as the dollar firmed after Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, prompting markets to bring forward the likely timing of a policy tightening. Given the front-loaded policy tightening in many EMs, currencies should be able to match or even outpace the dollar like Brazil’s real and Russia’s rouble, said Chris Turner, global head of markets at ING. South Africa’s rand retreated from five week highs to trade at 14.38 per dollar, while Russia’s rouble firmed 0.2%, up for the eighth session in nine at 0846 GMT, helped by inflows of foreign funds into rouble-denominated OFZ treasury bonds. Uncertainty over U.S. stimulus tapering will see short-term volatility in emerging markets currencies lingering, a Reuters poll showed. Stock markets fell, with MSCI’s index of EM shares down 0.3% on panic about the Fed’s stance combined with a weak handover from Wall Street that was hit by slowing U.S. jobs growth. Most Asian equities were in the red, with Hong Kong leading losses, while emerging markets in Europe , the Middle East and Africa were flat to 0.6% lower. Turkey’s BIST index fell from seven-week highs to break a seven-session winning run over which it gained 4.7%. Later on Thursday, the Czech central bank is expected to raise rates by 25 basis points to 0.75%. The crown was up 0.2% against the euro. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see Reporting by Susan Mathew in Bengaluru and Tom Arnold in London; Editing by Ramakrishnan M. Our Standards: The Thomson Reuters Trust Principles.