Erdogan lends to boost employment: ‘Interest rate cuts will boost inflation’

The statements made by the President of the country, Recep Tayyip Erdogan, on Monday afternoon, can be considered an attempt to save the faltering economy of Turkey. in the aftermath of the collapse of the Turkish pound.

“We live up to our promise not to crush our employees under the high cost of living.” he said, after the cabinet meeting.

He also announced the creation of a new tool that will help manage the burden of increased volatility in the Forex market: “Our citizens will not have to exchange their savings for pounds, due to volatility in the foreign exchange market.” He argued that it would encourage pound savings.

The government will make up for the losses of pound holders if the pound against hard currencies falls short of interest rates promised by banks, Erdogan said.

“Currency could help, but I think it depends on credibility and whether depositors believe this is a policy that can really be implemented,” Brendan McKenna, a currency analyst at Wells Fargo, told Bloomberg. “At the moment, Turkish institutions do not have much credibility, so there may be challenges for pound depositors to participate.”

He also said that Turkey would reduce the corporate tax by 1%.

At the same time, he stressed that loans will be given to support employment, as well the minimum wage announced on Thursday has already lost its value, as in four days it fell from $ 375 to $ 336.

True to politics, of course, that foreigners are to blame for everything, he claimed that he would not succumb to “attacks and conspiracies against Turkey”.

In an effort to “sweeten” the markets, he stressed that Turkey will not abandon the principles of the free market.

But he immediately defended his policy once again, saying he was confident that “interest rate cuts would drive down inflation in a few months.”

At the same time, he stated that “there is no shortage of foreign exchange in Turkey, there is plenty”.

Finally, he pointed out categorically that the country will not be led to early elections, as demanded by the opposition and a large portion of the population.

The Turkish president claimed that the foreign exchange reserves of the Central Bank will increase, exceeding 135-150 billion dollars. He insisted that he would not allow state-owned banks to use their loans to make money and said that no investor should make speculative moves.

According to Erdogan, the uncertainty of exchange rate instability does not reflect the reality of the country. He even insisted that there is no shortage of foreign exchange in Turkey, but plenty.

For the banking sector, he said it is stable.

After the speech of the Turkish president, the dollar-pound exchange rate fell from the all-time high of 18.41 to 14.80 in electronic transactions at 21:39 Greek time.

At the same time, the dollar came under pressure as US bond yields fell after a blow to Democrat spending plans in Washington and concerns about the continued spread of the Omicron variant.

Petros Kranias