Turkey's Erdogan calls on banks to offer lower interest rates | Eurasia Diary - ednews.net

21 November, Wednesday


Turkey's Erdogan calls on banks to offer lower interest rates

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Turkish banks should offer loans with lower interest rates to entrepreneurs to boost investments, President Tayyip Erdogan was quoted as saying on Tuesday, a move he said would bring down inflation.

Erdogan, a self-described “enemy” of interest rates, has said high inflation is caused by high interest rates and has repeatedly called for lower borrowing costs.

Worries over Erdogan’s grip on monetary policy and the ability of the central bank to fight inflation under political pressure have helped send Turkey’s lira down around 33 percent this year.

“All the finance sector should open the way for entrepreneurs in investments, especially giving loans not with high interest but with low interest rates,” state-run Anadolu news agency quoted Erdogan as saying.

“This low interest will bring down (the) inflation, which is a worry.”

Turkey’s central bank raised its policy rate by 6.25 percentage points in September to 24 percent to stem inflation and put a floor under the lira.

Inflation hit nearly 25 percent in September, official data showed, its highest level in 15 years, sharpening focus on whether the central bank would need to deliver a hefty rate hike.

Twelve out of 15 economists in a Reuters poll expect the central bank to stand pat on policy in Thursday’s monetary policy meeting.

Erdogan said his view on inflation and interest rates may cause conflicts with academics.

“This is something I believe because it is proven. They do not provide evidence as they speak, we provide evidence as we speak,” he was quoted as saying.

“Therefore, I say this principle: interest is the cause, inflation is the result.”

Reuters

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