IstanbulAfter the interest rate hike in Turkey, President Recep Tayyip Erdogan again strongly criticized the central bank. His patience has limits, he said on Friday for representatives of the ruling AKP about the interest rate policy of the monetary authorities.
On Thursday, against the declared wish of the head of state, they had powerfully increased the key monetary policy rate by 6.25 percentage points to 24 percent. The central bank had not reached its inflation target within 15 years, Erdogan said, who had harshly condemned the work of the monetary authorities shortly before the interest rate decision.
The country, plagued by a currency crisis and capital flight, lost investor confidence, mainly because of doubts about the independence of the central bank. Erdogan said that after the rate hike they will be able to see the results of the independence of the central bank.
The head of state also called on all Turks to have confidence in their currencies. You have to exchange all savings in Lira. Doubts about the independence of the central bank have contributed to the fact that the lire has lost more than 40 percent of its value since the beginning of the year.
After the interest rate decision on Thursday, the lira initially appreciated considerably, but under the comments of Erdogans again under pressure: A dollar was more expensive for the Turkish currency with 0.4 percent to 6.10 lire, one euro is 7.13 lire. According to Erdogan, the decline of the lira is due to a "gruesome economic attack" that started after a series of statements from the US.
Analysts have already warned of a new weakness in the lira, which has already lost about 40 percent this year. "The rate hike was the right decision, but what is important now is how the Turkish president positions himself to tighten up monetary policy," said economist Kota Hirayama of SMMA Nikko Securities. It was naïve to think that Erdogan respects the independence of the central bank.