The Turkish lira continues to break negative records, falling 10% to an all-time low today, trading at 12.7 pounds per US dollar in the afternoon. The currency responds to President Recep Tayyip Erdogan’s speech yesterday, in which he defended his fight to cut interest rates to boost economic growth and create jobs.
Erdogan has previously said that interest rates are “the devil” and also yesterday clarified that Turkey has abandoned the old policy based on high credit costs and a strong currency in order to slow down inflation, and instead now prioritizes larger investments, exports and job creation.
While most central banks are talking about tightening policies as the global recovery causes a spike in prices, the Central Bank of Turkey has cut interest rates by 4 percentage points (from 19% to 15%) since September – despite inflation well above the policy target. About 20%.
Erdogan adheres to his position, in contrast to the position of most economists in the world, according to which high credit costs cause inflation instead of curbing it. “We are pleased to see that the central bank’s interest rate is kept low,” he said in his speech, but it should be noted that there are not many other voting options as Erdogan tends to fire members of the Monetary Policy Committee who oppose interest rate cuts to allow him further relief.
“Turkey will act against unfair and unexplained price increases by those who use the weak pound as an excuse,” Erdogan added, noting that “we know very well what we are doing with the current policy, why we are doing it, what risks it entails and what we will achieve in the end.” .