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Erdoğan gets economics lesson

12 March 2015

Turkish President Recep Tayyip Erdoğan met with Deputy Prime Minister Ali Babacan and the central bank governor Erdem Başçı, at the presidential palace in Ankara.

In an attempt to repair the damaging effect of controversial comments Erdogan had made on central bank policy, he agreed that there was a need to maintain confidence in the economy after nervous reaction in international markets saw the value of the lira plummet.

The president has attacked the central bank for not drastically cutting interest rates to stimulate growth. His criticisms of the respected Erdem Başçı, becoming increasingly personal, have caused the lira to fall to historic lows against the dollar.

Başçı gave the president a two hour presentation on the state of the economy based on 130 slides which were also published on the central bank website (tcmb.gov.tr), Anadolu News Agency reported.

Babacan was also present at the meeting and stayed on for another half hour of talks with the president after Başçı left, Anadolu News Agency added.

Neither men made any comment at the end of the private meeting.

However, the presidency did issue a statement on its website saying Erdoğan had noted the “strong foundations” of the Turkish economy and the importance of the “robust and balanced” targets set out by the president in the drive to make Turkey a top 10 global economy by 2023.

Apparently acknowledging the need for a monetary policy that did not scupper the economy, the statement added that the president had also underlined the need “to maintain strictly the existing trust and stability” in the Turkish economy.

There had been rumours last month that Babacan and Başçı were on the verge of resigning, moves that seriously threatened the Turkish economy. However they remained in their posts and Erdoğan, in his latest speeches, has taken a more moderate line.

Erdoğan wants the bank to cut rates to boost the flagging growth of the Turkish economy, one of the cornerstones of his popularity, ahead of the June parliamentary elections. However economists have ridiculed his comments for ignoring persistently high inflation.

The presentation slides published on the central bank website appeared to show that Başçı had attempted to give Erdoğan a lesson in economic theory at the meeting, showing the relationship of inflation to interest rates and its effects on Turkey’s economic performance.

Source Hurriyet

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