World Economy

Erdogan Says Rate Cuts Should Continue Steadily

Recep Tayyip ErdoganRecep Tayyip Erdogan

Turkey’s central bank did the right thing by cutting interest rates this week and it should continue to do so, President Recep Tayyip Erdogan said.

“I believe it will be beneficial to continue this steadily,’’ Erdogan said in an interview Thursday in New York, hours after policy makers cut their overnight lending rate for a seventh straight month, Bloomberg reported.

The president described the move as “careful and balanced,’’ and said the country’s commercial lenders should absorb the message and lower their own borrowing costs. That’s the best way to make credit available to entrepreneurs, extend Turkey’s seven-year streak of uninterrupted economic growth and slow inflation, Erdogan, who’s been running the country for almost 14 years, said.

He poured scorn on the credit-rating companies which he said refuse to give Turkey its due for political reasons, while promoting other countries with inferior track records. “They’re making mistakes, and they’re doing it intentionally,’’ he said.

S&P Global Ratings has already cut Turkey’s debt to junk and Moody’s Investor Service Ltd has signaled it may follow suit. Erdogan was asked how he’d feel if it did. “I don’t care at all,’’ he said.

The new governor of Turkey’s central bank, Murat Cetinkaya, has delivered an Erdogan-friendly rate reduction at every meeting since he took the post in April, and his most recent one on Thursday took the overnight lending rate to 8.25%. Turkey’s stocks, bonds and currency all gained on the move, even though it came against a backdrop of inflation that’s above 8% and only slightly down from its year-ago level.

The day before the central bank’s rate cut, the government announced steps to give consumers more time to pay off debt, including credit-card purchases. The measures will spur growth but they’ll also have a negative impact on the external deficit and on inflation, deputy premier Mehmet Simsek said.