Turkey's President Recep Tayyip Erdogan/Supplied

Economy

Erdogan says economy must grow faster, signals interest rate cut

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Turkey exited its first recession in a decade in the first quarter, but the economy has struggled to keep up momentum as the prospect of punitive US sanctions dented consumer and business confidence.

Thursday 05, September 2019

Turkey’s President Recep Tayyip Erdogan has repeated his expectations that lower borrowing costs would give a boost to the country’s sluggish economy, a clear signal to the nation’s central bank a week before it decides on the level of the benchmark interest rate, reported Bloomberg.

“The policy rate will fall further,” says Erdogan. The Turkish president also repeated his general dislike for what he sees as elevated costs of borrowing, saying he is allergic to them.

Erdogan’s remarks set the tone as the central bank’s rate-setting body prepares to convene on 12 September. The monetary authority cut its benchmark rate by more 425 basis points to 19.75 per cent in July, only weeks after Erdogan abruptly appointed a new governor when the previous chief failed to lower rates as fast as the president would like.

Turkey’s gross domestic product must grow by five per cent in 2020—a target that the government is going to lock down on,” Erdogan said. The economy continues a slow slog after exiting recession in the first quarter, bank lending remains subdued.

The official target of 2.3 per cent GDP growth target for this year is widely seen as optimistic.

TAGS : rate cuts, TCMB, Monetary Policy Committee, Lira, recession

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