The Turkish Finance Minister revealed the new economic model set by the government, which is based on low interest rates, which coincides with the collapse Turkish lira currency to measurement levels.
The Federation of Banks in Turkey said today, Saturday, that Finance Minister Noureddin Nabati briefed the union, the Banking Regulatory and Supervision Authority and directors of government banks on the new economic model.
“Our banks will continue to use their resources to meet the financial needs of families and the real (transaction) sector within the free market mechanism,” the union added in a statement.
The lira reached a new low of more than 17 pounds against the US dollar, yesterday, Friday, after fears escalated from an inflationary spiral caused by President Recep Tayyip Erdogan’s new policy in the face of high prices, but it returned to relatively higher levels, and recorded 16.41 pounds against the dollar, after the intervention of Turkish Central Bank.
The Minister of Finance’s statements come at a time when one of the largest Turkish business organizations called on the Turkish president – without mentioning his name – in order to abandon his current economic policies.
The Association of Independent Industrialists and Businessmen of Turkey (TUSIAD), said in a statement today that the recent market turmoil is evidence of the failure of the empirical model, and the association stressed that “the need to return to the generally accepted rules of economics is clear.”
The Turkish president believes that Turkey can free itself from dependence on foreign capital inflows, by abandoning old policies that prioritized higher interest rates and strong inflows, and believes that lower interest rates will limit consumer price growth.
And the Turkish Central Bank reduced the interest rate again, the last five, by one hundred basis points (1%), to fall to 14%.
Erdogan says that temporary fluctuations are the price to pay for Turkey’s economic “war of independence” against speculators and “lords” of international finance.
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