Turkish President Erdoğan says rates policy unsuited to economic realities

ANKARA - Reuters

DAILY NEWS Photo

Turkish President RecepTayyip Erdoğan on Feb. 25 questioned whether the Central Bank was under external influence, saying its interest rate policy was not suitable for the economy.
   
Erdoğan said he had no objection to Central Bank independence but would not hesitate to criticise its mistakes, adding the focus of his concern was policy implementation, regardless of the character of its governor.
  
Erdoğan's comments, a day after the central bank cut its key one-week repo rate by 25 basis points, triggered a fall in the lira to 2.4800 against the dollar from 2.4670 beforehand.
   
"Don't take a stance against us using the cover of independence," Erdoğan warned the bank in a speech in Ankara. "If you do so, we may ask is some place exerting influence?"
   
Erdoğan, a vociferous advocate of soft monetary policy, did not make clear where he thought that external influence might be coming from.
   
But he has frequently railed against what he calls an "interest rate lobby" of speculators seeking to profit from higher interest rates, and has also accused former ally-turned-foe, U.S.-based cleric Fethullah Gülen, of wielding influence in parts of the state apparatus in a bid to unseat him.
   
Growing government criticism of monetary policy ahead of a June parliamentary election has heightened investor concern about the independence and credibility of the Central Bank.