Turkey will continue cutting interest rates rather than hiking them in the face of high living costs, President Tayyip Erdogan said on Monday, playing down inflation of more than 70% as one of several problems for the economy.
In a speech, Erdogan also redoubled his commitment to boosting production, exports and employment with his unorthodox low-rates policy. He again promised a current account surplus that will eventually steady the currency and cool inflation.
The remarks sent the lira down by 0.2% to as far as 16.6 to the dollar, its lowest since December when a currency crisis was triggered by a series of unorthodox interest rates cuts sought by Erdogan. In turn, inflation soared to 73% last month.
"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," Erdogan said.
"This government will not increase interest rates. On the contrary we will continue lowering the rates," he added, urging Turks to take advantage of low-rate loans and invest.
The lira slide, war in Ukraine and surging energy prices pushed Turkish annual consumer price inflation to its highest level since 1998. Inflation began to jump last autumn after a 500 basis-point rate easing cycle.
Erdogan zeroed in on the impacts of Russia's invasion of Ukraine.
"If there were no clash in the region, people would have been able to feel the concrete benefits of our economic program," he said. "Hopefully we will be at this point in the first few months of next year."