Interest rates should be lowered, says Turkish PM

Deniz Zeyrek

Prime Minister Ahmet Davutoğlu says he believes interest rates should be lowered, but stressed that he has not intervened in any of the Central Bank’s policies. AA photo

Prime Minister Ahmet Davutoğlu has said he "sent a message" requesting lower interest rates to Central Bank Governor Erdem Başçı during their talks on Oct. 24, adding that the Central Bank will give him a detailed briefing in November before attending the G-20 Summit.

“I, personally, believe interest rates should be lowered, but I did not intervene in any of the Central Bank’s policies about this. I said the same thing to Başçı during his visit on Oct. 24. I believe that an interest rate policy should be set so as to increase the confidence level in Turkey for the economy when commodity prices are decreasing and Turkey has achieved stability,” Davutoğlu said.

Turkey's Central Bank left interest rates unchanged on Oct. 23, saying it would not loosen its monetary policy until there is a significant improvement in the inflation outlook.         

The Bank said in a statement after its latest monetary policy meeting that the one-week repurchase rate would remain at 8.25 percent, the marginal funding rate at 11.25 percent, and the overnight lending rate at 7.50 percent.

Speaking on Oct. 26, Davutoğlu said the government was keen to preserve the independence of the Central Bank.

“Nobody has intervened in the Central Bank’s decisions regarding this process. Economic policies are part of a whole. Turkey’s growth rates are not independent from interest rate policies, nor are interest rate policies independent of exchange rates,” he noted.

“I had already said the same thing to Başçı, who is an old friend. I also noted that what I told him did not harm the independence of the Central Bank,” he added.