- Turkish President Recep Erdogan on Thursday said interest rates are a “tool of exploitation” and called for low interest rates.
- The Turkish central bank makes an interest rate decision today. It is meant to be independent but has been coming under increasing pressure from Erdogan.
- Analysts say Turkey needs to raise interest rates to combat inflation, which is running at 16%.
- Erdogan’s comments sent the Turkish lira down by as much as 3% against the US dollar.
- Follow the Turkish lira in real time here.
The lira is tumbling against the US dollar on Thursday morning after Turkish President Recep Erdogan called for lower interest rates, just hours before the central bank is due to make a decision.
The lira fell by 3% to 6.5225 per dollar as of 10.47 a.m. GMT (5.47 a.m. ET). It has since pared some of its losses and is down about 1.6% as of 11.15 a.m. GMT (6.15 a.m. ET).
Erdogan, who has called interest rates “evil”, said during a meeting in Ankara that he remains opposed to high-interest rates. He added that the Turkish central bank is independent and will make its own decision. The bank is due to publish its latest decision later Thursday and investors are hoping for an increase in rates.
Analysts have called for Turkey to hike its key interest rate by as much as 10% to combat inflation, which is running at 16%.
The lira collapsed against the dollar last month amid concerns about Erdogan’s growing control over monetary policy in Turkey and a dispute with the US that led to sanctions.
Erdogan earlier this year described interest rates as “the mother and father of all evil,” and he has recently been exerting ever greater influence over Turkey’s central bank. Last year, against conventional wisdom, he argued that high interest rates actually cause inflation.
On Thursday, he dubbed interest rates a “tool of exploitation.”