(Ankara) Turkish President Recep Tayyip Erdogan has again pledged to curb inflation, which reached over 21% over one year in November and is reducing the purchasing power of Turks a little more every day.
“We lowered inflation to 4% when I took office. And sooner or later, we will lower it again, ”he said after the closing of a Turkey-Africa summit on Saturday.
“But I will not let my fellow citizens, my people, be crushed by interest rates,” he added during a meeting with young Africans, in a video released on Sunday. “God willing, inflation will come down as soon as possible,” he said.
The official price increase reached 21.3% over one year in November, but this figure is the subject of a bitter political battle: the opposition accuses the National Statistics Office (Tüik) of knowingly – and largely – undervalue inflation. Commodities like sunflower oil have seen their prices rise by 50% over a year.
The daily life of the Turks is likely to become even more complicated: their currency hit a new historic low on Thursday, after a further cut in the key rate in accordance with President Erdogan’s wishes.
The Turkish Central Bank has decided to lower its main policy rate – from 15% to 14% – for the fourth month in a row, causing the pound to fall immediately within minutes of the announcement.
Contrary to classic economic theories, the Head of State indeed believes that high interest rates promote inflation.
But its monetary policy and the lack of independence of the central bank – from which it has sacked three governors since 2019 – have only dragged the Turkish lira to the bottom.
Mr. Erdogan, whose popularity is at its lowest after 19 years in power, seems, in view of the presidential election scheduled for 2023, to bet on growth at all costs. This reached 7.4% over one year in the third quarter, notably driven by exports, made less expensive.
But for the Turks, the collapse of the currency translates into a surge in prices which has become difficult to sustain, their country being very dependent on imports, especially for raw materials and energy.
The Turkish president however ruled out a possible capital control to slow down the fall of the national currency: “the Turkish economy will continue on its way, in accordance with the rules of a free market economy, as it did until here “.