Integrity Score 2097
No Records Found
No Records Found
No Records Found
Turkish lira has been a free fall touching new lows for weeks. But Turkey’s Prime Minister Tayyip Erdogan is not backing down on reducing interest rates. Since October, the lira has lost more than 30 percent in value.
“I have never advocated, do not advocate and will never advocate for increasing interest rates,” Erdogan told Turkish journalists on Monday. (https://news.kuwaittimes.net/website/erdogan-doubles-down-on-low-interest-rates-despite-lira-fall/)
Countries’ central banks are supposed to be independent bodies which take monetary decisions based on the economic situation of the country and the future outlook. But critics allege Turkish central bank has been bulldozed by Erdogan. He has advocated slashing of interest rates at a time when the inflation in the country is high.
World investment banks have warned the Turkish lira’s free fall would not stop unless Turkey returns to conventional economic policy. But Erdogan is going against the tide. For instance, he has claimed that higher interest rates cause higher inflation. Something the world central bankers disagree on. (https://bianet.org/english/economy/254059-erdogan-insists-interest-rates-cause-inflation-cites-his-economics-education)
Brushing aside many accomplished economists in his own country, Erdogan has been claiming that his "economics education," tells him that lower interest rates means less inflation. He has claimed that the country would bounce back to normalcy by the presidential elections in 2023.
The Turkish central bank had raised interest rates to a high of 19 percent, the highest in Europe in its efforts to cut inflation in the country. But with inflation showing no signs of coming down, Erdogan is alleged to have forced the central banks to slash the rates, which now stand at 15 percent.
But this has not down well with the international currency markets. Erdogan has blamed international speculators for crashing lira.
Read more:
Will Erdogan back down?
https://www.cnbc.com/2021/11/17/turkeys-erdogan-says-continuing-his-battle-against-interest-rates.html
Why Erdogan and inflation are bringing down the lira:
https://www.forbes.com/sites/jonathanponciano/2021/11/23/turkish-lira-historic-crash/?sh=6886f21b481c