Turkish President Recep Tayyip Erdoğan on Tuesday reiterated his economic mantra in favour of rate cuts in a speech broadcasted by state-run TRT.
“I always say that interest is the cause, inflation is the effect. We are currently reducing the interest rate, and I hope we will see a concomitant decrease in prices,” Erdoğan said.
“We will increase investment, employment, production, export and growth by reducing interest rates. We expect at least 10 percent economic growth, maybe more. By the end of the year, inflation will be reduced,” he said.
The Turkish president underpinned a new economic model in favour of lower interest rates.
“With the new economy model, we are dropping hot money flows that increase interest rates. We will boost production and export based on low interest rates,” he remarked.
Erdoğan vowed to defeat speculative attacks against Turkish economy.
“Turkey will remove economic threats caused by financial markets. Our real economy has the strength and capability to completely frustrate these threats.”
Turkish lira has plunged to a new record low of 13,68 on Tuesday after President Recep Tayyip Erdoğan’s successive remarks endorsing aggressive rate cuts by the central bank amid soaring inflation.
The currency has lost 5 percent of its value within the day.
Last week, the Turkish currency weakened to a record low of 13,49 against the U.S. dollar before recovering to around 12,45.
Inflation in the country is now near 20 percent.
Erdoğan has fired three central bank chiefs over the past two years for not endorsing his unorthodox belief that rates should be shrunk. An executive director of the Turkish Central Bank, Doruk Küçüksaraç resigned after the Turkish lira slid to a new record low on Tuesday, Bloomberg HT news site reported. Küçüksaraç had been working with the bank since August 2019.