Albayrak rates comments ‘did not refer to Central Bank’

TURKEY’S Treasury and Finance Ministry said on Wednesday that comments by Finance Minister Berat Albayrak about falling interest rates were referring to the overall trend in Turkey, and were not directly referring to Central Bank policy.

Clarifying Mr Albayrak’s remarks in a news conference on Tuesday, the ministry said he had stated that Turkey would see a declining trend in interest rates and that Central Bank decisions on rates “will be revealed as a result of the meetings it will hold”.

It said in a statement that Mr Albayrak had not meant that the bank was entering a period of interest rate cuts.

Last week the Central Bank cut its benchmark interest rate by 425 basis points to 19.75 per cent, from where it had stood since last September at the height of Turkey’s currency crisis.

The rate cut was Turkey’s biggest since at least 2003, and it was the first policy decision under new bank governor Murat Uysal, who took the reins after President Recep Tayyip Erdoğan sacked former governor Murat Çetinkaya three weeks ago.

Mr Albayrak said on Tuesday that with the recent loosening of interest rates “and based on the fact that the interest rate trend will come down more clearly and strongly in the coming period, we have entered a period of interest rate cuts”.

He also said that the Central Bank “makes its monetary policy and interest rate decisions based on its data set”.

At a rare press conference, the minister also acknowledged the budget deficit would be higher than the 1.9 per cent target by year end, although less than 3 per cent, and, contrary to many economists, predicted the recession-hit economy would grow in 2019.

The lira weakened slightly on Mr Albayrak’s comments before recovering to hit its strongest level in nearly four months.