Erdoğan reiterates interest rates will fall despite inflation reaching historic highs

Recep Tayyip Erdoğan

Turkish President Recep Tayyip Erdoğan today reiterated his unorthodox economic policies, announcing that interest rates will fall further and, as a result, inflation will fall, just days before the official January inflation figures are released.

Inflation reached its highest level in December during the his long 19 years in power.

On Friday, a Reuters poll showed that it is expected to reach 47% in January, a high of almost 20 years.

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"You know my battle with interest rates. We are reducing and will reduce interest rates," the Turkish president said to supporters in the Black Sea province of Kerasous (Κερασοῦς, Turkish: Giresun).

"Know that inflation will fall even more," he continued. "The exchange rate will stabilise and inflation will fall, prices will fall as well, all this is temporary."

Meanwhile, a decree published in Turkey’s official gazette on Saturday morning announced the removal of Sait Erdal Dinçer as the head of the national statistical institute after the official rate of inflation reached a 19-year high of 36 per cent in December.

He was only in the role for 10 months and was replaced by Erhan Çetinkaya, who was previously a vice-chair of the country’s banking regulator.

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The Turkish president opposes high interest rates and rejects economic orthodoxy that raising interest rates helps to curb inflation.

Instead, he argues that low rates will usher in price stability.

Erdoğan ordered the central bank to cut interest rates four times in the final months of 2020 and the Turkish lira plummeted in value to historic lows.

The removal of Dinçer comes after weeks of speculation in the Turkish media about friction between him and Erdogan over the rising official inflation rate.

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