President Tayyip Erdogan said he had lowered Turkey’s inflation to around 4% before and that he will achieve that again soon as annual price rises exceeded 21% due to his push for aggressive monetary easing that has sent the lira crashing.
Erdogan has said the new policy based on low-interest rates was part of a successful “economic independence war”, but most economists call it reckless and predict inflation soaring beyond 30% next year.
The lira hit a record low beyond 17 against the U.S. dollar on Friday following fears of an inflationary spiral. At the low, the lira had lost some 55% of its value this year, including 37% in the last 30 days.
In a meeting with African youth on Saturday that was aired on Sunday, Erdogan reiterated his unorthodox view that interest rates cause price rises, adding inflation would hopefully fall soon.
“Sooner or later, just as we lowered inflation all the way to 4% when I came to power, we will lower it again. But, I will not let my citizens, my people, be crushed under interest rates,” Erdogan said.
Inflation fell to around 4% in 2011, before beginning to gradually edge upwards from 2017. It jumped 3.5% in November to 21.3% annually.
Many Turks have said a 50% hike in minimum wage announced by Erdogan on Thursday will be insufficient. The hike is widely expected to boost overall consumer price inflation by 3.5 to 10 percentage points.
Under pressure from Erdogan, the central bank has cut rates by 500 basis points since September. Erdogan says the model will boost exports, employment, investments, and growth.
On Saturday, Turkey’s largest business group TUSIAD called on the government to abandon the low rates policy and return to “rules of economic science”. read more
Opposition parties have accused Erdogan of causing one of Turkey’s biggest currency crises and called for immediate elections, while several polls have shown support for the president and his ruling AK Party at multi-year lows.
Numan Kurtulmus, Erdogan’s deputy at the AK Party, said the government was working to fix economic hardships but would never abandon the new policy.
Elections are scheduled for mid-2023. Erdogan, in power for 20 years, has said there will be no early election.
Thousands protested in Istanbul and the southeastern city of Diyarbakir at the weekend over surging costs of living.
Some ferry lines operating from and in Istanbul were halted on Sunday over unsustainable costs stemming from the lira crash, operators said.