Mehmet Simsek, Turkish Finance Minister
Turkey’s new economic team met for the first time with dozens of international investors today, two sources said, and pledged to continue raising interest rates to curb inflation even as economic growth slows, according to Reuters.
According to the two exporters and a draft of the meeting, the eight-hour meeting in Istanbul included Finance Minister Mehmet Simsek and Central Bank President Hafiza Ghaya Arkan and discussed monetary and fiscal policy and economic outlook.
The face-to-face meeting with more than 40 investors reflects the shift the authorities are currently embracing, two months after President Recep Tayyip Erdogan appointed Simsek and Erkan to oversee a change in monetary policy to be more conventional.
The two sources, who asked not to be identified, said that Simsek stressed that reducing inflation is the priority, and that policy is proceeding to become the normal course.
Şimşek told investors that Erdogan fully supports monetary tightening, one of the sources said.
Under Arkan, the Turkish Central Bank raised the main interest rate by 900 basis points to 17.5 percent since June, but the pace of tightening did not match expectations.
Last week, it more than doubled its estimate for year-end inflation to 58 percent, in line with expectations.
Under its former chairman, the bank cut interest rates to 8.5 percent from 19 percent in 2021, in line with Erdogan’s unorthodox belief that high interest rates exacerbate inflation.
This caused a currency crisis, and the lira fell 44 percent in 2021, 30 percent in 2022, and another 30 percent since the beginning of this year until now.
Inflation touched a 24-year high of 85.5 percent last October.
It fell after that but rose sharply again in July to nearly 48 percent.
2023-08-04 18:47:53
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