Turkey will continue to lower interest rates rather than increasing them, President Recep Tayyip Erdogan said, amid growing concerns about a surge in the country’s inflation to a 24-year high.
Defending his government’s easing monetary policy, Erdogan told reporters on Monday that the government is implementing its own “genuine” economic programme, reports Xinhua news agency.
Turkey is an “independent” country that can determine and implement its own political and security priorities, and a “strong” nation that can implement its own economic and social programs, he said.
“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.
Instead of inflation, Erdogan referred to cost of living as the “actual problem”.
“Is inflation a problem? Yes, it is a problem. But is this title alone the main cause of Turkey’s problems? 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.
The Turkish lira fell to 16.59 against the US dollar on Monday after Erdogan’s remarks, bringing its losses of value to more than 20 per cent this year.
The lira shed more than 40 per cent of its value in 2021, as the Turkish central bank slashed its policy rate by 500 basis points to 14 per cent in December from 19 per cent in September despite high inflation, and has kept the same rate since then.
Erdogan is an advocate of low-interest rates, insisting that the move will ease the burden on investments amid rising inflation.
Turkey’s annual inflation surged to 73.5 per cent in May, the highest since October 1998.