Turkish President Erdogan calls interest rates a “plague” he wants to fight. (archive image)
“We will lift the interest rate crisis off the shoulders of our people,” Erdogan said on Wednesday in front of the ruling Justice and Development Party faction in Ankara. “We certainly will not let interest rates bring our people to their knees,” he said. “As long as I am in this position, I will continue to fight interest rates until the end. I will also continue my fight against inflation.”
Turkey’s national currency, the lira, has come under significant pressure against the US dollar and the euro in recent months and has fallen to record lows in each case. Now you can get more than ten liras for one dollar.
The situation was exacerbated by the loose monetary policy of the Central Bank, which recently cut its key interest rate twice despite rising inflation. Another rate cut is expected at Thursday’s central bank meeting. According to the official Anadolu news agency, Erdogan confirmed after his group’s speech that the Central Bank makes independent decisions.
Critics complain, however, that the cycle is heavily influenced by Erdogan, who is an outspoken opponent of high interest rates. The Turkish president has repeatedly changed the head of the central bank. Contrary to popular belief, Erdogan believes that high interest rates cause inflation rather than fight it.
“Interest is the cause and inflation is the result,” Erdogan emphasized on Wednesday. He couldn’t work with the proponents of high interest rates. Erdogan also complained about investors fleeing despite interest rate cuts. He said, “What kind of people are you?”
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