Turkey’s Erdoğan says interest rates too high to encourage investment

ANTALYA - Reuters

DHA photo

Turkish President Recep Tayyip Erdoğan renewed his call for lower interest rates on Nov. 15, saying they were too high to encourage investment and entrepreneurship, an argument likely to unnerve investors already worried about central bank independence.

Erdoğan has repeatedly called for lower rates to spur growth, equating higher financing costs with treason.

Economists say Turkey’s Central Bank needs to hike rates to rein in inflation. Its refusal to do so has sparked worries about political interference in monetary policy, helping send the lira currency to a series of record lows this year.

“In Turkey, the interest rates are high. Our rates are not those in the West, where they are low,” Erdoğan told a group of business and economic leaders at a labor market forum as part of the G-20 meeting in Turkey’s coastal province of Antalya.

“First you have to reduce the cost of money. As long as the cost of money is on the rise, you can neither find young businessmen nor young businesswomen,” he said.

The Justice and Development Party (AKP) founded by Erdoğan recovered its single-party majority in a snap election on Nov. 1. Investors are now waiting to see whether it will pursue a populist economic tack, or whether it will pursue greater fiscal discipline and attempt structural reforms that economists say are overdue.