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September 14, 2018 www.intellinews.com I Page 3
adopting the report. (Even if those votes had been counted, the report received support from 64% of MEPs.) He added that the Hungarian government would study legal remedy options.
When asked if Fidesz would stay in the EPP, he said it has become clear that the EPP is seriously divided on the issue of migration. “We’re fighting to make our position the majority,” he said, adding that Fidesz wanted to steer the EPP back onto the Christian democratic path he said would preserve Europe’s identity.
Turkish central bank hikes 625bp after political theatre from Erdogan
interest rate to 24%, causing the Turkish lira (TRY) to gain around 2.7% against the dollar by around 1530 local time.
Shortly before the rates announcement, the TRY lost around 3% against the US dollar when Er- dogan, in what seemed like carefully scripted po- litical theatre, sharply criticised the Central Bank of the Republic of Turkey (CBRT) for taking “wrong steps” over inflation and repeated his unconven- tional “Erdonomic” opposition to high interest rates. Investors have become increasingly worried that Erdogan, who espouses the unorthox theory that inflation is a consequence of high interest rates, has taken over monetary policy. Partly as a result of that, the TRY has recently been down by around 40% against the dollar in the year to date.
In his remarks to a traders’ confederation in An- kara, as reported by Reuters, Erdogan insisted the central bank’s independence was intact, but added: “If you say inflation is the cause and interest rates are the result, you don’t know this business.”
Opposition parties hailed the EP's decision as a win for democracy that rejected the Hungarian government's illiberal policies. The message to the government is clear: undermining and violat- ing basic rights and values cannot go unpunished in Europe, Socialist MEP Istvan Ujhelyi said.
Losing voting rights in the European Council would ultimately hurt Hungary, rather than the government, but if the Article 7 procedure is launched it would be “Viktor Orbán’s responsibility alone”, Green opposition party LMP said.
Adding that he had never seen the CBRT accu- rately forecast inflation, he also said: “We’ve been in this business for 16 years. Will we not learn? You may determine interest rates, but inflation is a result of the wrong steps you [the central bank] have taken. And who pays the price? The people.”
Erdogan also said in his speech that Turkey is “on the side of the free market economy” and would not deviate from the free market framework. “Dif- ficult times require difficult decisions to be taken and implemented,” he said. “All of our institutions, namely our economy management, are working day and night under my coordination as president.”
The president also slammed private banks, saying some had hiked their interest rates to 50%. “How can the private sector invest in such high interest rates?” he asked, adding that such margins were made only by drug dealers.
Responding to the interest rate rise, Timothy Ash at BlueBay Asset Management, wrote in a note: “Great decision — made all the more difficult by the huge pressure on the CBRT from Erdogan.
“Clearly Erdogan had got the heads up from the CBRT this morning that they were hiking and
his comments this morning were preparing the ground for his base constituency — putting all the blame now on the CBRT. He was saying I don't agree with this, but the CBRT is independent.”