Turkish Treasury chief signals further rate hikes to tame inflation

By Tuba Ongun

ANKARA (AA) – Türkiye’s recently appointed Treasury and finance minister on Thursday signaled further rate hikes this year in a bid to tame inflation.

The program of Türkiye’s new economic team is focused on fiscal discipline, gradual monetary tightening, and structural reforms, Mehmet Simsek Simsek stressed.

"Our program has three key components," Simsek posted on Twitter, listing them as: “Restoration of fiscal discipline; that is, reducing the budget deficit to a level compatible with the Maastricht criteria, excluding the effect of earthquakes (from this February); gradual monetary tightening and incomes policy in line with the inflation target in order to reduce inflation to single digits in the medium term; (and) structural reform that will make macroeconomic financial stability and all other gains permanent.”

Türkiye's annual inflation dipped to an 18-month low of 38.21% in June, according to official figures released on Wednesday.

In June, the Turkish Central Bank raised its policy rate by 650 basis points to 15%, its first such rise in 27 months.

The one-week repo rate rose to 15% from 8.5%, the bank said in a statement following its sixth Monetary Policy Committee meeting this year and the first under the helm of Hafize Gaye Erkan, the bank’s new governor.