ANKARA- Turkey's government will take measures to lower interest rates to reasonable levels, Prime Minister Binali Yildirim said on Tuesday, reiterating President Tayyip Erdogan's unorthodox stance that has unnerved investors.
Erdogan, a fierce opponent of high interest rates, said last week that he would hold talks with both state and private banks to "put the brakes" on interest rates.
Speaking to members of the ruling AK Party in parliament, Yildirim said that the current rates were not sustainable.
"Lowering interest rates is of utmost importance for our government. With the measures we will take, we will bring interest rates to reasonable levels," Yildirim said.
The central bank's late liquidity window rate
The rates were impossible to explain in Turkey's current economic conditions, Yildirim said, despite a 13-year high double-digit inflation.
Earlier this month, Erdogan blamed high inflation, which remains one of the Turkish economy's most pressing problems, on interest rates.
Erdogan's belief that inflation is caused by interest rates is at odds with orthodox economics, which views rates as an important tool to keep prices in check.
Turkey introduced the Credit Guarantee Fund (KGF), a stimulus to spur spending and revive the economy while supporting its real sector and battling high inflation.
The KGF was expanded in March to guarantee loans to small and medium-sized businesses that could not otherwise get credit. The fund has backed loans worth 219 billion lira ($59.92 billion) so far.
($1 = 3.6547 liras)
(Reporting by Ercan Gurses and Tuvan Gumrukcu; Writing by Ezgi Erkoyun; Editing by Dominic Evans) ((ezgi.erkoyun@thomsonreuters.com; +90-212-350 7051; Reuters Messaging: ezgi.erkoyun.thomsonreuters.com@reuters.net;))
