Prime Minister Recep Tayyip Erdogan had fingered what he called the "interest lobby” as the culprit behind his political problems arising from the Gezi Park protests and accused domestic and foreign financial institutions of fomenting unrest. But now to cope with the economic problems of the country, he had to allow the Central Bank to increase official interest rates in line with the demands of the financial institutions he had been blaming.
On July 14, Erdogan held a long summit meeting with his ministers involved with the economy. On July 15, when the markets opened, the statement by Erdem Basci, president of the Central bank, revealed the decision taken at the summit. Basci said the interest rate increase will be on the agenda of the Monetary Policy Council, which will meet on July 23. That statement was meant to be perceived by the markets as a sure indication of the upcoming interest-rate increase, and market performance duly improved. Interest rates of treasury bonds that were about to reach double digits eased back by one point, and the parities began to go down while stock shares went up.
