Prominent economist backs PM’s call for Turkey’s interest rate cut

LONDON - Anadolu Agency

In a private interview with an Anadolu Agency correspondent, O’Neill said many people had expected Turkey’s economy to slow down, particularly since last summer.

Turkish Prime Minister Recep Tayyip Erdogan’s recent call for an emergency meeting of the monetary policy committee to cut interest rates has been backed by Goldman Sachs’ former chairman, Jim O’Neil.

In a private interview with an Anadolu Agency correspondent, O’Neill praised the Turkish Central Bank’s original decisions to up interest rates.

“I think the Central Bank did a pretty good job ... The Turkish Lira actually did respond to the hike in interest rates. It was a smart thing to do,” he said, but added that “since the Turkish Lira is now stable, why would they not reduce the interest rate. It makes sense to me.”

O’Neill said many people had expected Turkey’s economy to slow down, particularly since last summer.

“[However], it doesn’t appear to be slowing as much as the main consensus would think. Turkey has
got some positive sides and some people seem to underestimate it.”

Turkey’s interest rates were substantially raised in January to defend the value of the lira, but last week the prime minister called on the country’s Central Bank to cut back interest rates to stimulate the economy.

However, Erdem Başçı, the governor of the Central Bank, dismissed the calls on April 7 saying: “It is better to gradually decrease the interest rate. Steps should be taken without eroding confidence in Turkey.”

O’Neill coined the term BRICS back in 2001 to describe the burgeoning economies of Brazil, Russia, India and China and recently came up with MINT to describe the world’s next big economies – Mexico, Indonesia, Nigeria and Turkey.