Erdogan says Turkey came under 'economic attack'

The president will oversee financing for large state development projects

The president will oversee financing for large state development projectsMURAT KULA REUTERS

Erdogan has been a fierce opponent of raising rates and some investors in the Turkish economy had fears he could be interfering in the central bank's affairs.

The magnitude of the hike was all the more surprising given that just before the decision Erdogan had slammed interest rates as a "tool of exploitation".

It was not immediately clear if Erdogan had been aware of the central bank's decision when he made his comments.

It has now increased interest rates by 11.25 percentage points since late April as it struggles to bring the lira out of freefall.

Currently, the interest rates are below the annual inflation level in Turkey.

The bank's decision came hours after Erdogan, a self-described "enemy of interest rates", reiterated his opposition to high interest rates and blamed Turkey's high inflation on the central bank's wrong steps.

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The bank said that inflation developments pointed "to significant risks to price stability" due to the recent fall in value of the lira.

Last month, the U.S. imposed sanctions on two Turkish government ministers and also imposed tariffs on imports of Turkish steel and aluminium in a bid to pressure Turkey to release Brunson.

The Turkish currency lost almost a quarter in value against the dollar in August.

However, speaking to Middle East Eye, Julian Walker, a director at Spot Blue, a UK-based company that specialises in property in Turkey, said: "I don't think this move will be awful for business".

The president also called on the country's people to trust the national currency and convert their savings to lira.

Bank of England Governor Mark Carney told ministers Britain's property market could crash and mortgage rates spiral up if there was a chaotic no-deal Brexit, the Times newspaper reported.

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"Ultimately, I think if you're buying long-term in Turkey, it shouldn't really be an issue". The leader placed his son-in-law as head of the finance ministry and in a separate move has attempted to take control of the country's sovereign wealth fund.

Erdogan took over as Turkey's first executive president in July with sweeping new powers, including oversight over economic policy and the ability to appoint the central bank governor.

Albayrak and Sonmez were among the seven members in the Turkish fund's new board, the Reuters news agency reported. Erdogan said last September the fund was to be reorganised after dismissing its chairman over its failure to meet targets.

The overhaul comes two years after the fund was formed to try and capitalize on state assets and put a lid on market turmoil in the wake of a failed coup attempt.

Tens of billions of dollars worth of state assets, including the wholly state-owned Ziraat Bank, were transferred to it in 2017.

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