Erdogan says Turkey’s interest rates will continue to fall

Cheaper cash will boost manufacturing, create jobs and slow inflation, Turkish President Recep Tayyip Erdogan said in a TV news interview. The lira extended losses after his remarks, falling as much as 8.1 percent against the US dollar.

Turkey’s interest rates will continue to fall, President Recep Tayyip Erdogan said, making a case for an economy freed from dependence on short-term foreign cash and transformed into one that thrives on local production and exports.

Cheaper money will boost manufacturing, create jobs and slow consumer inflation currently running at four times the official target of 5%, and the currency will eventually strengthen, Erdogan said in an interview with state broadcaster TRT on Tuesday. Turkey’s lira hits record low after Erdogan defends rate cuts

Turkey won’t try to attract capital flows that leaves its economy at the mercy of “hot money,” or investments that can be quickly withdrawn, Erdogan said. His pledges put the Turkish central bank in an awkward position after monetary policy makers said they would assess ending interest rate cuts as early as December. Even so, the Turkish lira lost almost 28% of its value since the bank started its current easing cycle in September and lowered the benchmark rate down by 4 percentage points to 15%.

“Our country has now come to the point of breaking this vicious cycle, and there is no turning back from here,” Erdogan said. The lira extended losses after Erdogan’s remarks, falling as much as 8.1% against the U.S. dollar. It was trading 6.4% lower at 13.7058 per U.S. dollar as of 11:07 p.m. in Istanbul.

Price Shocks

Erdogan unveiled his most recent policy stance a little over a week ago, pushing for lower interest rates to turbo-boost growth and revive his flagging popularity ahead of the 2023 vote. Source: aljazeera.com