Turkey's interest rates high but lowering them still tough: Şimşek

ANKARA

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Turkish Deputy Prime Minister Mehmet Şimşek has said those who say interest rates are high are right, but the main problem is how to reduce rates without creating permanent problems.

“Those who say the rates are too high are right, including our President [Recep Tayyip Erdoğan]. The main point is how to achieve this [lower rates] by not creating other problems,” he said, as quoted by Anadolu Agency on March 29, at a meeting held by the Ankara Chamber of Industry. 

Erdoğan has repeated his opposition to higher interest rates and vowed to continue fighting against the “interest rate lobby,” in several meetings, claiming nobody makes an investment in an environment with higher interest rates. 

Şimşek said he found the arguments about the rates correct and of great importance. 

“If you [as industrialists] reach long-termed cheaper financing, it will be quite likely for you to grow your business more and become more competitive. These are reasonable demands. The main point is how to manage other problems by doing this,” he said. 

Şimşek noted many countries have actually applied zero rates today, but problems still exist. 

While there are now government bonds with $7 trillion worth of negative yields, the bonds of some one-third or one-fourth of companies are traded at 10 points higher than U.S. rates, he said. 

“The money is expected to go to where the rates are higher, isn’t it? On the contrary, the money outflows from the emerging markets, in which the rates are becoming higher. The money goes to the developed countries with zero or negative rates,” he said.