Erdogan speaks with bankers on interest rates
Turkish President Tayyip Erdogan has met Central Bank Governor Murat Cetinkaya and officials from state banks to discuss steps to reduce interest rates and encourage investment, a senior economic official said yesterday.
They also discussed credit expansion and increasing exports at Thursday’s meeting, the official said.
Cetinkaya has said his main goal this year is to bring inflation down to single digit even though Erdogan, who has described himself as an “enemy” of interest rates, has repeatedly called for lower rates.
Presidential adviser Cemil Ertem told state-run broadcaster TRT Haber that Erdogan and the bankers discussed possible reforms that would be introduced to encourage the Central Bank to reduce interest rates.
“If you introduce the required reforms, if you introduce reforms in the production side ... if you create new sources for the banking system, the rates will fall. They made decisions (during the meeting) to introduce these reforms,” he said.
Ertem said that banks needed to support the real sector, adding that new reforms would push banks to do so.
“The banking system cannot keep standing (without funding the real sector),” he said. “We will create such market conditions for competitors that ... the banking system will have move towards this.” Thursday’s meeting was also attended by Prime Minister Binali Yildirim and Deputy Prime Minister Mehmet Simsek, the official said.
Turkey’s 2017 inflation stood at 11.92 per cent, far above the bank’s official target of 5 per cent. At its most recent policy-setting meeting, the bank left its top rate steady at 12.75 per cent, in line with expectations.