ISTANBUL (Reuters) - Turkish Prime Minister Tayyip Erdogan urged Turks not to use credit cards, accusing banks of locking people into poverty with excessive fees, and rounding on an "interest rate lobby" he says is seeking to weaken the economy.
The comments opened a new front in the verbal attacks Erdogan has periodically made against the financial community, which is betting the country's central bank will raise borrowing costs next week to steady the ailing lira currency.
Speaking late on Tuesday during an Iftar dinner, the evening meal with which Muslims break their daily fast during Ramadan, Erdogan said banks were growing rich on high commissions and urged people to live within their means.
"Don't get these credit cards," he said at the dinner with families of war veterans and fallen soldiers.
"Who is paying this money, it is not the rich but the poor. They die to get a credit card. They show off with it. Before the month's end the money finishes ... We have to thwart this game together."
Erdogan and members of his government have accused speculators and a "high-interest-rate lobby" of stoking volatility in financial markets to make a quick profit at the expense of the Turkish economy.
With the prime minister also keen to maintain strong economic growth ahead of elections next year, the central bank has been reluctant to hike rates following a credit-fuelled boom.
But the country's assets have been hit along with other emerging markets since the U.S. Federal Reserve suggested in May it would begin scaling back its stimulus program, while weeks of often violent anti-government demonstrations last month damaged Turkey's reputation for stability added to the pressure.
Governor Erdem Basci signaled on Monday the central bank may raise rates next week to stem a slide in the Turkish currency, which has sunk to record lows against the dollar in recent weeks.
That would make the lira and lira-denominated assets such as Turkish government bonds more attractive to foreign investors, as well as pushing up commercial banks' lending rates.
Erdogan, who repeatedly said last year he wanted real interest rates of zero percent, vowed last month to "choke" speculators growing rich off "the sweat of the people", urging Turks to put their money in state not private banks.
"I didn't say "interest rate lobby" recently for nothing. I say these things because I know something," Erdogan said.
In a rare written statement ahead of Tuesday's central bank monetary policy committee meeting, governor Basci said global policy uncertainty and volatility would not be allowed to damage financial and price stability in Turkey.
The lira eased slightly to 1.9285 against the dollar by 1028 GMT from 1.9211 late on Monday but remains well off its weakest-ever level of 1.9737 seen on July 8.
(Writing by Nick Tattersall; Editing by John Stonestreet)