February 28, 2015 / 9:44 PM / in 3 years

Turkey's Erdogan says high interest rate 'lobby' guilty of treason

Turkey's President Tayyip Erdogan addresses the provincial governors of Turkey during a meeting at the Presidential Palace in Ankara February 27, 2015. REUTERS/Kayhan Ozer/Presidential Palace Press Office/Handout via Reuters

ISTANBUL (Reuters) - Turkish President Tayyip Erdogan on Saturday said anyone opposing interest rates cuts was guilty of treason, piling more political pressure on the central bank.

Governor Erdem Basci on Friday dismissed rumors that Erdogan’s criticisms of the central bank for not cutting rates swiftly enough would force him to resign.

On Saturday, the president stepped up his rhetoric: “There is a very serous threat from the interest-rate lobby,” he told a news conference broadcast live on NTV.

“Anyone who defends this (high rates) is at the beck and call of the interest-rate lobby, this is treason against this nation.”

Erdogan’s criticisms of monetary policy are a concern to investors who fear the central bank could lose its independence, speculation that has helped push the lira to record lows.

The president believes current rates are impeding economic growth, which could dent his party’s support as it heads into a general election in June.

The bank lowered its main one-week repo rate for the second straight month on Tuesday, trimming it by 25 basis points to 7.5 percent.

“With rates this high, can there be investment in this country? Without investment, there won’t be employment or production. Your exports won’t get the chance to compete in the competitive market,” Erdogan said.

He also dismissed as gossip the rumors that Governor Basci and Deputy Prime Minister Ali Babacan would resign in the face of his criticisms.

Reporting by Ayla Jean Yackley; Editing by Robin Pomeroy

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