Erdoğan seeks big drop in interest rates in Turkey next year

Turkish President Recep Tayyip Erdoğan said he wanted to see much lower interest rates in the country next year.

Erdoğan called on Turkish businesses to take out loans in local currency, saying they should make a success of borrowing in liras instead of taking out loans in foreign currency, according to the state-run Anadolu news agency.

“God willing, 2020 will be a year when interest rates fall much further,” Erdoğan told a meeting of local officials at the headquarters of his governing Justice and Development Party (AKP) during a speech in Ankara on Wednesday.

Turkey’s central bank has slashed its benchmark interest rate by 1,000 basis points, or 10 percentage points, to 14 percent since July, when Erdoğan sacked and replaced the bank’s governor for failing to listen to government calls for lower borrowing costs. State-run banks have followed suit, cutting rates on business and consumer loans as inflation slowed to single digits.

Erdoğan said Turkish executives should not be afraid of putting capital to work.

“I am calling on our investors – do not be concerned, do not worry, please continue to invest in your sectors,” he said.

Erdoğan’s government has set an ambitious goal to grow the economy by 5 percent next year. Most economists expect a lower number and have said that measures to drive growth upward could lead to economic overheating.

The lira slumped to a record low last year partly due to concerns about government steps to stimulate economic activity and a mounting pile of corporate loans in foreign currency.