Erdogan told businessmen and women that Turkey is reaping the fruits of its policies.
Turkey’s annual inflation rate has risen to a 19-year high, underscoring the country’s financial turmoil and concern regarding the president’s policies.
Prices rose more than 36 percent in December, as the cost of transportation, food and other basic goods consumed family budgets.
Most central banks are raising interest rates to help cool inflation, but Turkey has gone the other way.
This led to a collapse in the value of the lira, following President Recep Tayyip Erdogan prioritized exports over stabilizing the currency.
The lira lost 44 percent of its value once morest the dollar last year, and fell once more 5 percent on Monday, before recovering and remaining steady.
The depreciation of the lira has raised the cost of imports that drive up inflation, which ranges from energy to many raw materials that factories in Turkey turn into exports.
Erdogan has called interest rates the “mother and father of all evil” and has used unorthodox policy to try to lower rates, including by interfering in foreign exchange markets.
In a speech on Monday, he said Turkey was “going through a transformation in the economy and rising to the next level.”
He added that the nation “reaps its fruits, especially in exports, for our country’s efforts and hard work in the past twenty years to boost our foreign trade.”
An economist predicted that inflation would reach 50 percent by the spring if a different monetary policy was not taken.
“Rates should be raised immediately and aggressively because this is urgent,” said Ozlem Dershi Şengul, co-founder of Spin Consulting Istanbul, but adds that it is unlikely the central bank will take any action.
Erdogan made changes to the leadership of the central bank last year. The bank has cut interest rates to 14 percent from 19 percent since September.
The subsequent exponential rise in prices, and the fall in the lira, upended household and business budgets.
There were pictures published last month of people queuing for subsidized bread in Istanbul, and local officials there said the cost of living had risen by 50 percent within a year.
The cost of living is expected to rise further, especially following the recent increases in electricity and gas bills, by regarding 50 percent and 25 percent, respectively.
The central bank said temporary factors drove prices, and in October it forecast the year would end at 18.4 percent.
The bank’s official inflation target is 5 percent, but the rate has remained in the double digits for the past two years.
Erdogan revealed a scheme three weeks ago to limit the weakness of the lira, in which the state protects transferred local deposits from losses in exchange for hard currencies. This led to a sharp rise of 50 percent in the lira with the support of the Central Bank.
But the lira sank once more last week, prompting the president on Friday to call on people to keep all their savings in lira and transfer gold to the banks.
The economic turmoil has affected opinion polls’ assessment of President Erdogan’s popularity ahead of elections due no later than mid-2023.
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