Erdogan Urges Central Bank to Keep Going on Interest Rate Cuts
Erdogan Urges Central Bank to Keep Going on Interest Rate Cuts
(Bloomberg) -- Turkey’s President Recep Tayyip Erdogan reiterated his call for the central bank to maintain its series of interest-rate cuts, arguing the strategy will eventually bring inflation under control.
Erdogan spoke to Turkish journalists during a visit to Qatar on Tuesday as the central bank, which has slashed borrowing costs by 400 basis points to 15% since September, prepares for the last rate-setting meeting of the year on Dec. 16.
Facing falling support in opinion polls ahead of 2023 elections, Erdogan has embarked on a full-throttle push to expand the economy and create jobs by demanding the central bank reduce borrowing costs. His strategy has battered the currency, which lost more than 45% of its value to the dollar so far this year.
“We certainly don’t believe in high interest rates. We will pull down inflation and exchange rates with low-rate policy,” said Erdogan. “High rates make the rich richer, the poor poorer. We won’t let that happen.”
Erdogan said his government aims to support investments through low rates which he said will lead to higher production, exports and jobs. “Growth will follow,” he said.
The president signaled potential swap deals between the Turkish central bank and “many other central banks.”
Erdogan also dismissed criticism from opposition parties that the central bank’s reserves had been depleted in supporting the lira.
“Turkey doesn’t have a serious FX reserve issue and we will continue to build FX reserves,” Erdogan said.
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