Star economist backs call for Turkey's interest rate cut
Wednesday, April 09, 2014
LONDON - Turkey's Prime Minister Recep Tayyip Erdogan’s recent call for an emergency meeting of the monetary policy committee to cut interest rates has been backed by Goldman Sachs' former chairman, Jim O'Neil, the man who coined the term BRICS back in 2001 to describe the burgeoning economies of Brazil, Russia, India and China and recently gave us MINT to describe the world's next big economies – Mexico, Indonesia, Nigeria and Turkey.
In a private interview with an Anadolu Agency correspondent, O’Neill praised the Turkish Central Bank’s original decisions to up interest rates. “I think the Central Bank did a pretty good job...The Turkish Lira actually did respond to the hike in interest rates. It was a smart thing to do." However, he added that "since the Turkish Lira is now stable, why would they not reduce the interest rate. It makes sense to me.”
O’Neill commented that a lot of people had expected Turkey's economy to slow down particularly since last summer, but said that “it doesn’t appear to be slowing as much as the main consensus would think. Turkey has got some positive sides and some people seem to underestimate it.”
Turkey's interest rates were substantially raised in January to defend the value of the Turkish Lira, but last week the prime minister called on the country's Central Bank to cut back interest rates to stimulate the economy. However, Erdem Basci, the governor of the Central Bank, dismissed these calls Monday saying, "It is better to gradually decrease the interest rate. Steps should be taken without eroding confidence in Turkey.”
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