Turkish President Recep Tayyip Erdogan on Wednesday said lowering interest rates would prevent inflation from accelerating further.
“No more high interest-rates because high interest rates would bring us higher inflation,” Erdogan told AHaber television in an interview.
The president’s second call for an interest rate-cut in as many months could threaten to trigger a slide in the lira against the dollar. Erdogan said Turkish inflation, which climbed to 18.95% in July from 17.53% in June, probably peaked in August.
“It is not possible for inflation to accelerate further from now on, because we’re transiting to lower interest rates,” Erdogan said in what he said was “a message to somewhere” without saying whether it was addressed to the central bank.
The president holds the unorthodox belief that lower borrowing costs will help slow the pace of price gains as well as stimulating the economy, and he has repeatedly urged the central bank to cut the benchmark rate. He’s pressing his case again as the economic damage wrought by pandemic restrictions, rapid inflation and high unemployment have sharply undercut his popularity and that of the ruling party he controls.
Bloomberg