ISTANBUL: Turkey’s President Recep Tayyip Erdogan vowed “no compromise” on low interest rates in comments published by Turkish media yesterday, despite a currency crisis. The embattled Turkish lira crashed last week and has continued to lose value against the dollar after a series of rate cuts by the central bank in spite of rampant inflation.
Erdogan ordered Saturday the State Supervisory Council, an auditing body under the president’s direct authority, to investigate currency manipulation claims. “I have never advocated, do not advocate and will never advocate for increasing interest rates,” Erdogan told Turkish journalists on board his plane returning from a trip to Turkmenistan at the weekend.
“Even if others who think differently appear, Tayyip Erdogan has the same position. I will absolutely not compromise on this issue,” he said, quoted by NTV broadcaster. Erdogan strongly opposes high interest rates and goes against orthodox economic thinking to claim they cause high inflation. He railed against the “interest rate lobby” which seeks to push Turkey to adopt higher rates, insisting inflation would fall before elections in 2023. Under heavy pressure from the president who has sacked three governors since July 2019, the central bank has cut the main interest rate every month since September.
The rate is 15 percent, down from 19 percent before the first rate cut on September 23. But inflation has remained stubbornly in the double digits for the past two years. The annual rate was at nearly 20 percent in October and there are fears the figure will be much higher for November when that month’s data is published Friday. The lira has lost 42 percent in value against the greenback since the start of 2021, crashing to 13 to the dollar last Tuesday. The lira’s weakness has persisted, with the currency losing over three percent to reach 12.7 to the dollar at around 1200 GMT yesterday after Erdogan’s comments were published. – AFP