May 2, 2019 / 11:28 AM / 4 months ago

Turkey's Erdogan says determined to lower interest rates to targeted levels

FILE PHOTO: Turkish President Tayyip Erdogan addresses bussiness people during a meeting in Ankara, Turkey, May 2, 2019. Kayhan Ozer/Presidential Press Office/Handout via REUTERS

ANKARA (Reuters) - President Tayyip Erdogan said on Thursday he was determined to lower interest rates to targeted levels and described recent comments on falling central bank forex reserves as aimed at creating negative sentiment towards Turkey.

“Together, we will win this battle against those trying to trap Turkey in the exchange rate, interest rate and inflation plot,” he said in a speech to business people in Ankara. “We are certainly determined to lower exchange rates, interest rates and inflation to targeted levels,” he added.

The central bank governor said on Tuesday interest rate hikes remained an option if inflation unexpectedly jumps and defended the bank’s reserves policy against concerns that have grown as the lira tumbled in recent weeks.

At its policy-setting meeting last week, the central bank left its key interest rate unchanged at 24 percent. Annual inflation is currently near 20 percent. Erdogan is a regular critic of high interest rates, calling for lower borrowing costs to boost economic activity.

The lira, which has weakened 11 percent against the dollar this year, was steady at 5.9675 against the U.S. currency on Thursday. The main share index was down 0.51 percent.

A currency crisis last year, fueled in part by concerns over political pressure on monetary policy, wiped nearly 30 percent off the value of the lira and helped tip the economy into recession.

Reporting by Ece Toksabay and Tuvan Gumrukcu; Writing by Daren Butler; Editing by Ezgi Erkoyun

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