World Economy

Erdogan Says Interest Rates Too High

Erdogan Says Interest Rates Too HighErdogan Says Interest Rates Too High

Turkish President Recep Tayyip Erdogan renewed his call for lower interest rates on Sunday, saying they were too high to encourage investment and entrepreneurship, an argument likely to unnerve investors already worried about central bank independence.

Erdogan has repeatedly called for lower rates to spur growth, equating higher financing costs with treason, Reuters reported.

Economists say Turkey’s central bank needs to hike rates to rein in inflation. Its refusal to do so has sparked worries about political interference in monetary policy, helping send the lira currency to a series of record lows this year.

“In Turkey, the interest rates are high. Our rates are not those in the West, where they are low,” Erdogan told a group of business and economic leaders at a labor market forum as part of the G20 meeting in Turkey’s coastal province of Antalya.

“First you have to reduce the cost of money. As long as the cost of money is on the rise, you can neither find young businessmen nor young businesswomen,” he said, as the central bank governor, Erdem Basci, and IMF chief Christine Lagarde looked on.

The AK Party founded by Erdogan recovered its single-party majority in a snap election on Nov. 1. Investors are now waiting to see whether it will pursue a populist economic tack, or whether it will pursue greater fiscal discipline and attempt structural reforms that economists say are overdue.

 Meets Xi

Chinese President Xi Jinping in a meeting with Erdogan vowed to boost bilateral trade and investment. Xi is in Turkey to attend the G-20 Summit.

“Both sides should make full use of the platforms such as the Silk Road Fund and the Asia Infrastructure Investment Bank to innovate cooperation channel and mode so as to achieve common development and prosperity,” Xi was quoted by Chinese news agency Xinhua.

A map unveiled by Xinhua shows the Chinese plans for the Silk Road run through Central China to the northern Xinjiang from where it travels through Central Asia entering Kazakhstan and onto Iraq, Iran, Syria and then Istanbul in Turkey from where it runs across Europe cutting across Germany, Netherlands and Italy.

The Chinese president suggested expanding the use of each other’s own currency for bilateral trade and investment facilitation.

Security cooperation between the two countries should be deepened, Xi said.

Turkey is willing to actively participate in the cooperation within the framework of Belt and Road initiative and would welcome Chinese enterprises to invest more in Turkey in fields such as infrastructure, Erdogan said.