Turkey’s new finance minister has met with a group of businessmen to reassure them that the government will not back down from free market principles amid a monetary catastrophe caused by successive cuts in interest rates, according to Bloomberg.
The six-hour meeting in Istanbul on Saturday was the first for Nureddin Nebati since he was appointed finance minister on December 2nd by President Recep Tayyip Erdogan. His predecessor, Lutfi Elvan, was known to oppose interest rate cuts favored by Nebati and before his resignation publicly warned that “institutions” should work “within their mandates” against inflation.
“The business world does not want to think about whether the dollar will fall to 9 per pound or rise to 14,” said Nail Olpak, head of the External Economic Relations Council, according to the Anadolu agency. “It is now clear that there will be no compromise in the free market.”
The Turkish pound has fallen 46% against the dollar this year, the worst performance among the major currencies monitored by Bloomberg.
The central bank, which cut its one-week repurchase rate by 400 basis points from September to 15%, is expected to continue its decline on December 16, defying inflation more than four times the target of 5%.
More than 60 participants in the meeting expressed concerns about issues such as rising energy prices, outstanding payments from state institutions and tax requirements, according to a Twitter post by Rifat Hisartzikioglu, head of the Union of Chambers and Stock Exchanges. Sekip Avdagic, who heads the Istanbul Chamber of Commerce, said he supported the government’s “new policy axis”.
One week before he was appointed minister, Nebati tweeted in support of Erdogan’s low interest rate policy, saying that the current account deficit was the biggest problem in the economy and that interest rates should be reduced against supply-side inflation.
The minister is expected to meet with bank executives later this month, according to Mehmet Ali Akben, head of the banks’ regulatory authority.
Source From: Capital