(Bloomberg) — Turkey President Recep Tayyip Erdogan promised the country would continue cutting interest rates, suggesting that lower inflation will follow.
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“We will lower interest rates as we have done already,” said Erdogan, after the Turkish central bank halted a rate-cut cycle this month that trimmed 500 basis points from the benchmark rate since September.
The aggressive easing cycle was accompanied by runaway inflation, which has caused an outcry among Turks who’ve witnessed a deep erosion of their purchasing power in a few months.
“We are aware of the fact that the inflation is a serious burden on citizens, Erdogan said on Saturday in northern province of Giresun. “I repeat here, as you already know my fight against interest rates; we will lower interest rates as we have done already. Inflation will decline as well.”
The Turkish president has been a vocal advocate of a theory that lower interest rates lead to lower inflation, the opposite of what most economists believe. The Turkish experience has not backed up Erdogan’s thinking. The lira plunged to historic lows and inflation hit a 19-year high after the central bank started the rate-cut cycle in line with Erdogan’s demands.
Turkey Said to See Inflation Rate Peaking at About 40% in 2022
Turkey will release January inflation data on Thursday. Annual inflation is expected to surge to 48% according to the median estimate in a Bloomberg survey of 16 analysts.
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