Turkey's under fire ex-Central Bank governor stands behind his words

ISTANBUL

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Former Central Bank Governor Durmuş Yılmaz has told Hürriyet that he stands behind his Jan. 3 words about the relation between inflation rates and interest rates, after he was criticized by President Recep Tayyip Erdoğan for “not minding his own business.”

“This is my job and I speak about what I know the best. If you think interest rates are the cause of high inflation, then you must believe that because interest rates are low in the U.S., the EU and Japan, inflation will also be lower there. If lower interest rates work by themselves, these countries and regions would have resolved their stagnation problem,” Yılmaz said on Feb. 5.

“There is a 350-400 year-old economic literature. If it is not true, then let’s burn the books of Adam Smith or John Maynard Keynes. And let’s change the law of the Central Bank and make the rates zero. If this works, then I will publicly apologize for my economic illiteracy and I will say ‘I do not know this job,’” he added.

The former Central Bank governor had said on Jan. 3 that there is no direct relation between lower interest rates and growth rates, commenting on President Erdoğan and a number of political figures’ criticism of the Central Bank’s decision not to hold an interim meeting to lower interest rates. He said the inflation rate is still too high to take such a step.

Erdoğan, who is a keen supporter of lower interest rates to boost growth, directly targeted Yılmaz after the latter’s comments.

“He should mind his own business. He is not my addressee anymore. I know he was successful. I think he should look at what happens in the U.S. and the relationship between the interest rate and the inflation rate. He should look at the West, or Japan. There is no need to talk about this issue anymore,” he said.