Turkey's Erdogan allows finance minister to raise interest rates

June 14 (UPI) -- Turkish President Recep Tayyip Erdogan he has agreed to the finance minister's monetary policy shift on interest rates amid high inflation and the lira's record low against the U.S. dollar.

While indicating he hasn't personally changed his anti-interest rate hike position, Erdogan said, "But on the point of our treasury and finance minister's current thinking, we, of course, easily yielded to him to take the steps here quickly and together with the Central Bank. We said 'good luck', and in this way, we also declared our determination to reduce inflation to single digits."

In May, Turkey's annual inflation rate was 46.62%. In November 2022 it hit 85.5%, the highest in 24 years.

Finance Minister Mehmet Simsek, who was appointed in June, persuaded Erdogan to raise interest rates after a 2 1/2-hour meeting.

"It looks like Erdogan has given Simsek a mandate to hike [rates]. That is positive," Timothy Ash, emerging markets strategist at Bluebay Asset Management, told CNBC. "Clearly he says he does not agree with orthodox monetary policy but is willing to back Simsek for the time being."

Erdogan has kept interest rates low as the lira has lost nearly 90% of its value over 10 years. He maintained raising interest rates harms the economy.