Türkiye's new Finance Minister signals further interest rate hikes to rein in inflation

Mehmet Simsek, Türkiye newly appointed Treasury and Finance Minister, has indicated that further interest rate increases are likely to be implemented this year in an effort to control inflation.
06.07.2023 11:51:28 / English News

In a Twitter post, Simsek outlined the three key components of the new economic team's program: restoring fiscal discipline, gradual monetary tightening, and structural reforms.

Simsek said that the program would focus on reducing the budget deficit, implementing gradual monetary tightening, and introducing structural reforms to solidify macroeconomic and financial stability.

Programımızın üç temel bileşeni var:

- Mali disiplinin yeniden tesis edilmesi; yani deprem etkisi hariç, bütçe açığının Maastricht kriterleri ile uyumlu bir seviyeye çekilmesi,

- Enflasyonun orta vadede tek haneye düşürülmesi için kademeli parasal sıkılaştırma ve enflasyon…
— Mehmet Simsek (@memetsimsek) July 6, 2023

The minister's comments come after official figures released on Wednesday revealed that Türkiye's annual inflation had decreased to an 18-month low of 38.21% in June.

The Turkish Central Bank raised its policy rate by 650 basis points in June, marking the first increase in 27 months. The one-week repo rate was raised from 8.5% to 15%.

It remains to be seen whether the new economic team's program will be successful in bringing down inflation. However, Simsek's comments suggest that the government is committed to taking tough measures to control prices. (ILKHA)