Turkish President Recep Tayyip Erdogan vowed that Turkey would continue lowering interest rates rather than increasing them, in his most explicit remarks that come as inflation soars.
“This government will not hike interest rates, no one should expect this from us. On the contrary, it will continue cutting the rates,” Erdoğan said in a televised address after a Cabinet meeting in capital Ankara.
Erdoğan reiterated his opposition to higher borrowing costs, which he says only makes “the rich richer and the poor poorer.”
The president redoubled his commitment to boosting production, exports and employment with a low-rates policy. He again promised a current account surplus that will eventually steady the Turkish lira and cool inflation.
Fueled by soaring food and energy prices, Turkey’s annual inflation rate rose at a lower-than-expected pace in May but still jumped to a 24-year high of 73.5%.
“A part of the (inflation) problem is that some citizens are insisting on keeping their savings in foreign currencies, the other part is the imported inputs due to increasing production,” Erdoğan said. He urged households to take advantage of low-rate loans and invest.
“Those who benefit from the exchange rate, interest and inflation triangle do not understand our country’s growth strategy through investment, employment, production and current account surplus,” the president noted.
In a technical sense, Erdoğan said there is an “actual problem of the cost of living, not inflation.” “Is inflation a problem? Yes, it is a problem. But is this title alone the main cause of Turkey’s problems? It certainly isn’t. If it were, our country would have solved all the problems thanks to the anti-inflation programs implemented countless times in the past,” he explained.
