President Recep Tayyip Erdogan has blasted Turkey’s Central Bank, saying that lack of government intervention in monetary policy has saddled Turkey with high inflation and a slowdown in investment.
“They are saying that central banks have an independence; they told us not to intervene. It came to this point because we haven’t [intervened],” Erdogan said in a speech to party members in Ankara on Friday, Hürriyet said.
Declaring his opposition to the Central Bank’s interest rate corridor policy, Erdogan once more reiterated his view that interest rates cause inflation, despite lira, languishes low against US dollar.
“This will not work this way, we will solve it out. We cannot make it a taboo. It has been insisted for 15 years. We have decreased the interest rates, and inflation has fallen to one digit. Now, the rates have been raising, the inflation has raised to double digits,” Erdogan said.
“If you try to give loans with such high rates, of course investments will be hindered and halted... We lowered interest rates and inflation fell to single digits,” he added.
The Turkish Lira weakened to 3.9 against the US dollar following Erdogan’s comments before easing slightly to 3.8925 in the afternoon.