Erdogan insists on interest rates cuts

President Recep Tayyip Erdoğan insisted on Monday that the government was opposed to higher interest rates even as inflation in the country soars to its highest level in nearly 25 years.

"This government will not hike interest rates. On the contrary, it will reduce them," Erdoğan said in a televised address after a weekly cabinet meeting.

The Turkish central bank, which is nominally independent, holds its next policy-setting meeting on June 23.

But Erdogan's comments came after official data showed that inflation in Turkey hit 73.5 percent in May, the highest level since 1998.

Contrary to economic orthodoxy, Erdoğan is convinced that high interest rates fuel inflation rather than rein it in.

The economy has gone into a tailspin since last year when Erdoğan -- who is up for re-election next year -- put pressure on the central bank to start slashing interest rates.