After the Center’s decision on interest rates, Erdogan’s statements are back on the agenda

While the thesis of AKP President and President Recep Tayyip Erdoğan, who introduced Turkey in 2022 with a new economic model saying “My field is economics, I am an economist”, “interest is the cause, inflation is the result “made Turkey pay a high price, today’s record rate hike. Erdogan reiterated what he had said in the past.

Erdogan then criticized the economists’ thesis that “interest is the cause, inflation is the result.”As long as I am in this position, I will continue my fight against the interests to the end. What is clear in this? What’s wrong with you, with me, now that you’re in the middle?” answered.

NOT AN ORDINARY PROVISION

As the criticism continued, Erdogan again made religious references, saying:

“What’s up, sir? We were lowering interest rates. Don’t expect anything more from me. As a Muslim, I will continue to do whatever it takes. Alhamdulillah we are on the right path. Because the rule that interest makes the rich richer and the poor poorer is not an ordinary rule for us.“

Under the low-interest policy, which caused a heavy loss in the TL and a rapid increase in inflation in the past two years, the CBRT gradually lowered interest rates by 1,000 basis points, and lowered them by 50 basis points. basic up to 8.5 percent. to support recovery after the February earthquakes.

With its June 2023 decision, the CBRT raised interest rates for the first time since March 2021.

Speaking to reporters on the plane while returning to Turkey from Azerbaijan in June, Erdogan asked a question about the economy:In view of the current thinking of our Minister of Finance and Finance, of course we accepted that he would take the measures that he would take here quickly and easily together with the Central Bank, we said “good luck”.”, he had replied.

HE SAID ‘YOU KNOW MY STRUGGLE WITH INTEREST’

Official annual consumer inflation was 19.25 percent in August 2021, before the CBRT began cutting interest rates. The official interest rate for the CBRT was 19 percent. In November, when Erdoğan announced the new economic model, inflation was 21.31 percent, while the official rate was lowered to 15 percent. In the period when the model was applied, official inflation experienced the new peak of the 21-year period of AKP rule.

Although the Central Bank lowered the policy rate on Erdogan’s instructions, deposit and loan rates were seen at 20-year highs.

On January 29, 2022”You know my fight with interest: we will lower and lower interest rates. Know that inflation will also decrease, it will decrease even more. The exchange rate stabilizes, inflation decreases and the cost disappears. All of these are temporary.Erdogan said: “He failed to bring inflation down during the year, so he abandoned his promises until 2023.”Everyone should calculate based on 20 percent inflation in 2023He ended the year 2022 with words. However, this calculation did not hold in 2023 and the rise in inflation accelerated.

In the pre-election period, the government opened the credit faucets at the expense of inflation and the current account deficit, but at that time, although many citizens could not access credit, those who could face interest rates above 50 percent. While applying for loans and buying a house and a car is now a dream for most of society, interest on deposits has exceeded 40 percent levels. Erdogan “really” lost in his battle against interest rates.