Erdogan vows ‘sit and talk’ with central bank on rates

‘Hey, central bank, what are you still waiting for?’ Erdogan asked in a televised speech

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Turkish President Recep Tayyip Erdogan on Friday pledged to press the central bank for a cut in interest rates in the face of plummeting oil prices, appearing to put in question the bank's independence.

“Hey, central bank, what are you still waiting for?” Erdogan asked in a televised speech.

The Turkish leader brushed off criticism that he was interfering in the functioning of the central bank -- which according to the constitution is independent -- with his repeated calls for a rate cut.

“They may now say the central bank is independent. I am also independent. I have to say this as the voice of the people. We will sit and talk with them. This won’t continue like this,” said Erdogan.

“We need investment, employment, production, exports -- which our economy is based on,” he added.

The Turkish central bank is scheduled to hold its next monetary policy committee meeting on Tuesday.

In December, the bank defied pressure from Erdogan and kept its main interest rates unchanged, saying that the one-week repurchase rate would remain at 8.25 percent, the marginal funding rate at 11.25 percent and the overnight borrowing rate at 7.50 percent.

“While every (central bank) in the world is reducing (interest rates), our central bank is standing where it is. It does not cut. What are you waiting for?” said Erdogan.

“Look, oil prices have now dropped to $45 from $106-110 ... Calculations are made accordingly.”

However many economists have warned that a rate cut at this stage could be highly unwise given that inflation in Turkey remains well above the central bank’s target.