Turkey – Erdogan increases economic crises by insisting on his strange policies
Despite the growing economic crisis in Turkey, President Recep Tayyip Erdogan still insists on moving forward with his monetary policy, saying that the Central Bank will continue to cut interest rates on his policy every month as long as he remains in power.
Insistence of Erdogan
The Turkish President’s statements came at a time when inflation in the country reached a new high in 24 years, exceeding 83% in September, according to the Turkish newspaper Sozcu. The Turkish President continues his call to reduce interest rates, as the Turkish Central Bank has cut interest rates twice in the past two months, in contrast to the global economies that raise interest rates to control prices.
“As long as I am in this position, the interest will continue to fall with each passing day, every week that passes, every month”, the Turkish newspaper quoted Erdogan as saying at a rally in the western province of Balıkesir, where Erdogan maintains the unconventional belief that high borrowing costs lead to higher prices, which is contrary to established economic theory.
Failed experiment
In the same vein, last year Turkey’s president launched an unconventional economic experiment to try to reduce chronically high inflation by lowering interest rates, a move that plunged the country into a new economic crisis; “The lira has been pushed back, losing 44 % of its value against the US dollar in 2021 and around 28 % this year.”
Erdogan called for further interest rate cuts at the upcoming Central Bank policy meeting on 20 October, but prices in the country have risen at a much higher rate than reported by the government’s statistics agency, according to a monthly study by independent economists from the Turkish ENAG Research Institute. The official annual rate of consumer price hikes was 186.27% in September, compared to 181.37% in August, ENAG said.
