The government will continue lowering interest rates, President Recep Tayyip Erdoğan said, vowing to fight against the rising cost of living.
“This government will not hike interest rates. No one should expect us to do this. On the contrary, we will keep lowering the rates,” Erdoğan said following a cabinet meeting in Ankara on May 6.
Erdoğan noted that the interest rates of central banks in 136 countries are below the inflation rates. “We have abandoned the outdated economic policies, which were dictated by imperialist financial institutions that only make the rich richer and the poor even poorer.”
“We started to implement the Turkish Economy Model instead, which is designed to boost growth through investment, production, exports and current account surplus,” the president said.
In technical terms, there is a problem with the cost of living in Turkey, not inflation, the president said.
“Is inflation a problem? Yes, it is a problem. But is it the main cause of Turkey’s problems? Absolutely not. If it were the case, Turkey could have overcome all of its problems thanks to the programs focused on fighting inflation which the country implemented, sometimes successfully, numerous times in the past.”
Erdoğan furthered that Turkey does not suffer from a budget deficit, which is seen as the cause of inflation and said that price increases are not due to demand.
“On the production side, Turkey does not face problems that could not be overcome. The part of the [inflation] problem is that some of our citizens still insist on keeping their savings in foreign currencies.”
The other part of the problem is the demand for foreign currencies, which stems from the need for imports due to increasing production, he added.
Erdoğan noted that imports rose because of the exorbitant increases in energy prices.
“If there were no clash in the region, people would have been able to feel the benefits of the government’s economic program,” the president said, referring to the war in Ukraine.
“Hopefully, we will reach that point in the first months of next year.”
Erdoğan reiterated that the government would continue to take measures to curb the price increases.
Production of the goods whose prices increase unreasonably will be encouraged, and the supply of those products will be ensured so that the stockpiling will be prevented, the president said.
Last month, the Central Bank kept its policy rate – the one-week repo rate – unchanged at 14 percent, in line with market expectations. The annual consumer price inflation in Turkey accelerated from 69.97 percent in April to 73.5 percent in May.