Turkish presidential aide says interest rates should ‘definitely’ be lowered

 21 Mar 2016 - 11:48

Turkish presidential aide says interest rates should ‘definitely’ be lowered

ISTANBUL: Turkey’s interest rates should ‘definitely’ be lowered and the interest rate corridor must be narrowed from the top downwards, an aide to President Tayyip Erdogan said on Monday, three days before a central bank policy meeting.

Presidential adviser Yigit Bulut made the comments to state broadcaster TRT. The central bank is expected to keep its main rate on hold for the 13th month running on Thursday, according to a Reuters poll.
Erdogan has repeatedly railed against high interest rates, arguing that they cause inflation - a departure from orthodox economics - and has in the past equated them with treason.
“When we look at the U.S. interest rate it is 0.5 percent and they recently increased it from 0.25 percent. When you look at Japan and Europe, interest rates are around 1 to 2 percent,” he said in a discussion broadcast on TRT late on Sunday.
Including commission, the total cost of borrowing in Turkey was around 15-16 percent, Erdogan said.
“What does that mean? You are hindering investments because to be able to make investments you need to lower the cost of money. Is it possible to make investments without having a low cost of money. No, it is not,” he said.
All but one of 26 analysts surveyed by Reuters said they expected the bank’s benchmark interest rate to stay at 7.5 percent on Thursday. But seven predicted a cut in the overnight lending rate, the upper band of the central bank’s rate corridor, currently at 10.75 percent.
On Thursday another Erdogan adviser, Cemil Ertem, told broadcaster NTV there was a chance of a cut to the upper band.
REUTERS