Erdogan calls ‘interest rates’ ‘mother of all evil’, lira slides

ISTANBUL, May 12, (RTRS): Turkish President Tayyip Erdogan called for lower interest rates on Friday and described them as the “mother and father of all evil”, triggering a fresh slide in the lira as investors worried about the central bank’s ability to rein in high inflation.

The lira weakened as far as 4.3080 against the dollar after his comments, from a close of 4.2374 on Thursday. On Wednesday it had hit a record low of 4.3780 before rebounding strongly the following day.

“If my people say continue on this path in the elections, I say I will emerge with victory in the fight against this curse of interest rates,” Erdogan said in a speech to business people in Ankara, referring to snap elections on June 24.

“Because my belief is: interest rates are the mother and father of all evil.”

The central bank last month raised its late liquidity window rate, which it uses to set policy, to 13.5 percent from 12.75 percent.

Inflation stood at 10.85 percent yearon-year in April, far above the bank’s target of 5 percent.

Thursday’s rebound in the lira was driven by news that Erdogan had held an unscheduled meeting of his economic team to address the sell-off in the currency, which has fallen more than 11 percent against the US currency this year.

At the meeting, Erdogan and the economic team agreed to take measures to help shield the lira.

Turkey’s central bank governor and the general managers of the largest state lenders, Ziraat Bankasi, Halkbank and Vakifbank attended Thursday’s meeting.