Erdoğan, opposition in debate over interest rates as core inflation hits 13.5-year highs

ANKARA

ABD Merkez Bankası Fed'in bu yıl faizlerde daha hızlı faiz artırımına gidebileceği beklentisi gelişen ülkelere yönelik baskı yaratıyor. Her ne kadar diğer gelişmekte olan ülkelerde etki sert hissedilmese de, TL'deki değer kaybının arkasında bu neden de yatıyor. Yeni başkan Donald Trump'ın politikalarının 20 Ocak'ta netleşmesinin ardından Fed'in marttaki toplantısında faiz artışı gerçekleşebilir.

A new debate on interest rates has been stirred between President Recep Tayyip Erdoğan and main opposition Republican People’s Party (CHP) leader Kemal Kılıçdaroğlu, as official data showed on Oct. 3 that Turkey’s core inflation rose to 13.5-year highs in September.

Core inflation, which excludes energy, food and other volatile prices, rose to 10.98 percent year-on-year in September, the highest level since February 2004, data from the Turkish Statistics Institute (TÜİK) showed.

The data also showed that headline inflation rose to 11.2 percent, its third-highest level this year.

President Erdoğan on Oct. 3 reiterated his claim that high interest rates fuel inflation.

While the Central Bank has vowed to stick to a tight monetary policy, Erdoğan - who has described himself as an “enemy” of interest rates - has called for lower rates to boost credit growth and spending.

‘Inflation high due to high interest rates’

“We still have not been able lower inflation. This is due to interest rates,” Erdoğan said in a speech to deputies from his ruling Justice and Development Party (AKP) in Ankara, after the data was released.

“The fall in interest rates is unfortunately not at the level we would like. If we cannot achieve this, many troubles await us. We must solve this,” he said, as quoted by Reuters.

Erdoğan’s belief that inflation is caused by interest rates is at odds with orthodox economics, which views rates as an important tool to keep prices in check.

His comments once again prompted concern that the Central Bank is less than independent. The Bank last month left its highest policy rate, known as the late liquidity window, unchanged for the third straight meeting.

‘Take steps’

CHP head Kılıçdaroğlu harshly criticized Erdoğan’s stance on interest rates, saying that are other ways to resolve the problem.

“Why are you interfering with the Central Bank’s business? The Central Bank is constantly urged to decrease interest rates. Who appointed the Central Bank president? It wasn’t me. It was you,” Kılıçdaroğlu said, referring to the government and Erdoğan at his party’s weekly parliamentary meeting.

“If the Central Bank head does not do what he needs to do, you can make him step down rather than always making complaints,” he added, accusing the government of being the main actor of the so-called “interest rate lobby.”