Erdogan: Investors will not be crushed by high interest rates

Since President Erdogan’s “reclaim” of Turkey’s economy management, he is back on the scene every day trying to build the worn out trust in the Turkish economy.

A day before the critical central bank monetary policy committee meeting scheduled for November 19th the President once again addressed the public at an economic council meeting of the Turkish Union of Chambers and Commodity Exchanges in the capital Ankara.

With all eyes on the central bank decision and Erdogan’s previous reservations that had blocked rate hikes, his comments on inflation and the interest rates were closely followed.  He in fact said , “We should not allow our investors to be crushed by high interest rates” interpreted as some form of a rate hike was permitted by the President yet the magnitude is still debatable.  The market favors 400-500 basis points rate hike that would almost equal the 10.25% policy rate (one week repo) with the central bank’s average funding rate at around 14.7%.

His further comments about generating employment, boosting exports, making production and investments were not possible with high interest rates, keeps adding to the central bank’s room for autonomy now that the governor changed amidst the TL’s strong slide.

On production he said Turkey must concentrate on production, investment, employment, and exports on an increasing scale.

He repeated his claim about a new era being ahead for Turkey.  He repeated commitment to fiscal discipline, with a growth and employment-oriented approach.

Noting that financial and price stability are to be simultaneously ensured, Erdogan noted that immediately cutting inflation down to the single-digits would be the government’s top priority.  He said Ankara would continue to provide all suitable conditions for both domestic and international investors.

The president underlined that Turkey would end the third quarter with a strong economic growth thanks to leading data for September.  “I believe we’ll end the year with positive growth, despite the ongoing challenges due to the coronavirus outbreak,” said Erdogan.