Mehmet Şimşek Responds to Central Bank’s Interest Rate Decision: “Our Money is Stable and Safe
Treasury and Finance Minister of Turkey, Mehmet Şimşek, expressed confidence in the Turkish lira following the decision by the Central Bank of the Republic of Turkey (CBRT) to raise the policy interest rate by 650 basis points to 15 percent. In a statement made via his social media account, Şimşek emphasized that the Turkish currency is “stable and safe.”
Sustainable Growth, Stability, and Confidence
Reiterating the central tenets of the economic philosophy of the “Turkish Century” as Stability, Trust, and Sustainability, Şimşek asserted that the upcoming economic policies would be crafted around these principles. He emphasized they aim to build an economy where 85 million citizens and future generations can live prosperously and securely and reach their full potential.
He highlighted the importance of predictability in investment and employment decisions and said that trust is the primary factor in ensuring predictability. He stressed that confidence can only be achieved by implementing rule-based policies.
The Importance of Rule-based Policies
Minister Şimşek outlined a three-pronged approach for implementing rule-based policies, which he believes will attract significant capital flow to Turkey. This framework includes the following:
- A rule-based monetary policy focused on price stability and maintaining financial stability,
- A predictable fiscal policy aiming at a stable structure in the public sector budgetary balance and sustainable budget financing,
- A policy framework grounded on a market economy, free exchange regime, and an open economy.
A Stable and Secure Currency
As per Şimşek, having a stable and secure local currency is the most effective solution to avoiding the issue of dollarization. He mentioned that the government’s economic philosophy, as stated in the most recent election manifesto, was based on the principles of enterprise freedom, a market economy, an open foreign exchange regime, a floating exchange rate system, and an inflation targeting model.
He concluded his statement by asserting that the decision taken by the Central Bank to increase the policy rate should be evaluated within this framework. This decision is essential in regaining stability and making the Turkish lira a reliable currency.
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