Erdogan says ‘allergic’ to interest rate hikes

Istanbul: Turkish President Recep Tayyip Erdogan on Wednesday said he was “allergic” to high interest rates — sticking to his position for low rates to stimulate growth.

“I am allergic to interest rates, high interest rates,” Erdogan said in a televised speech in the eastern city of Sivas.

In July, the country’s central bank made a bigger-than-expected cut to its main interest rate by 4.25 percentage points, lowering the one-week repo rate to 19.75 percent from 24 percent.

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The move came shortly after the bank’s governor was sacked over alleged clashes with Erdogan who opposes high interest rates.

Erdogan, who boasted of high growth rate in the early years of his ruling Justice and Development Party (AKP), argues high interest rates cause high inflation.

Erdogan signalled Wednesday the interest rate would be lowered further.

“Right now the fall in the interest rate has started again, the inflation has dropped. The policy rate will drop further.”

The Turkish GDP expanded 1.2 percent in the second quarter — compared with the first quarter, a figure which is stronger than expected, the data from the Turkish Statistics Institute showed Monday.

Analysts however say there is a growing risk that the efforts for recovery could lead to a renewed build-up of economic imbalances.

Erdogan remained upbeat and said his government would focus on a target of “5 percent growth” in 2020.

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