Erdogan at the key interest rate: Turkish lira on the downside again

Turkish President Erdogan has once again vehemently spoken out against his view of interest rates being too high. After that, the Turkish currency lira slipped to a record low.

It is well known that Turkish President Recep Tayyip Erdogan is a declared opponent of a high key interest rate. Today he stepped up again in Ankara – with a view to inflation in the country. That is around 20 percent.

Erdogan interferes again and again

“I say it clearly and unambiguously. Interest is the cause and inflation is the result,” said Erdogan. “We will make sure that the people are not crushed by the interest burden. I will fight against interest rates and inflation until the end.” Erdogan commented a day before the central bank’s decision on the level of the key interest rate. Experts expect it to lower it further – from now 16 to 15 percent.

The Turkish lira had already depreciated further in the last few days, 3.7 percentage points yesterday alone. For one dollar you could get up to 10.45 lira. Today, according to Erdogan’s statement, the price went further down. The Turkish currency has lost almost 30 percent since the beginning of the year.

Central bank independence in doubt

Erdogan emphasized again that the central bank decides independently. Experts, however, have massive doubts about this. Investors are therefore very cautious about business in Turkey, it is said again and again. Erdogan also announced today that he would not be able to work with proponents of high interest rates.

Three central bank governors had to leave Turkey in less than two years. The current incumbent Şahap Kavcıoğlu surprisingly lowered the key rate by two percentage points at the end of October. That corresponds to Erdogan’s ideas.