Erdogan says his patience on central bank policy has limits

A handout photo taken and released on August 13, 2018 by the Turkish Presidential Press Service of Turkish President Recep Tayyip Erdogan (AFP PHOTO / TURKISH PRESIDENTIAL PRESS SERVICE / KAYHAN OZER)
A handout photo taken and released on August 13, 2018 by the Turkish Presidential Press Service of Turkish President Recep Tayyip Erdogan (AFP PHOTO / TURKISH PRESIDENTIAL PRESS SERVICE / KAYHAN OZER)

Turkey’s President Recep Tayyip Erdogan resumed his criticism of the nation’s central bank a day after it announced the biggest rate hike of his rule.

The rand gained 1.3% on Thursday following the rate hike. It strengthened on early trade on Friday, before starting to weaken in the afternoon. 

“It’s currently my phase of patience but there is a limit to this patience,” Erdogan told members of his ruling AK Party in Ankara on Friday. He restated his opinion that higher rates won’t help to slow inflation and warned that his restraint won’t last forever.

The central bank was responding to repeated calls for a rate increase, Erdogan said, and responded with a “quite” big hike. Turkey would see the “results of the independence” of the regulator, he said.

The lira erased gains on the comments and was trading 0.4% lower at 6.1058/$ at noon in Istanbul. The rand was trading 0.7% lower at 14.87 to the greenback at 14:54. 

Thursday’s surprise move buoyed markets that had been mired in a slump for months, triggered by a diplomatic row with the US and then amplified by central bank inaction.

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