Türkiye’s central bank will not raise interest rates to above or near the current headline inflation after the upcoming critical elections, Treasury and Finance Minister Nureddin Nebati said Friday, stressing that no one should expect such a scenario.
President Recep Tayyip Erdoğan has been saying his government would not reverse the course of its economic policies and would keep favoring lower interest rates if they win the presidential and parliamentary elections slated for May 14.
Officials have asserted that the model, dubbed the "Türkiye Economy Model" and unveiled in 2021, prioritizes low-interest rates to boost exports, production, investment and creates new jobs and have promised it would continue after the vote.
"There is no need for anyone to expect our president to reverse these policies and go to new ones after the elections. The president is the architect of this model," Nebati told private broadcaster NTV.
The government’s program eventually aims to lower inflation by flipping the country’s chronic current account deficit to a surplus.
Annual consumer price increases in Türkiye moderated further in April, easing for the sixth consecutive month, in a trend the government says is expected to continue.
According to official data, the consumer price index (CPI) has almost halved from its peak in October last year, easing to an annual 43.68% last month.
The reading marks a notable regress from 85.51% in October – a 24-year peak. It fell in December and touched 50.51% by March, with a favorable base effect and a relatively stable Turkish lira.
A coalition of six Turkish opposition parties has pledged to roll back current economic policies should they win the elections.
Erdoğan says high rates cause inflation and has advocated for lower borrowing costs. He has said the government’s new economic model would yield results in 2023.
Last year, the Central Bank of the Republic of Türkiye (CBRT) cut its benchmark one-week repo rate by 500 basis points to counter an economic slowdown and held it at 9% in December and January.
It trimmed it by another 50 basis points in February to boost industrial production and employment after the devastating earthquakes before it left the key policy unchanged in March and April.
Erdoğan said recently that interest rates would continue to fall as long as he is in power.
Curbing price increases has been the top priority for the government ahead of the upcoming vote, which is seen as the most crucial vote in the centurylong history of the republic.
Erdoğan has said inflation is currently high, highlighting that it has decreased significantly in recent months and will continue to do so.