Investments

Turkey’s Erdogan terms interest rates too high for investment

Long a champion of populist economics, Erdogan has repeatedly called for lower rates to spur growth, equating higher financing costs with treason.

Economists say Turkey’s central bank needs to hike rates to rein in inflation. Its refusal to do so has sparked worries about political interference in monetary policy, helping send the lira currency to a series of record lows this year.

“In Turkey, the interest rates are high. Our rates are not those in the West, where they are low,” Erdogan told a group of business and economic leaders at a labour market forum as part of the G20 meeting in Turkey’s coastal province of Antalya.

“First you have to reduce the cost of money. As long as the cost of money is on the rise, you can neither find young businessmen nor young businesswomen,” he said, as the central bank governor, Erdem Basci, and IMF chief Christine Lagarde looked on.

The AK Party founded by Erdogan recovered its single-party majority in a snap election on Nov. 1. Investors are now waiting to see whether it will pursue a populist economic tack, or whether it will pursue greater fiscal discipline and attempt structural reforms that economists say are overdue.

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