Turkey’s Finance Minister Mehmet Şimşek said Tuesday at a conference in Istanbul that the Turkish Central Bank of the Republic (TCMB) believes it has done what it needs to do in terms of tightening monetary policy to achieve its goal of curbing inflation, even though it soared in February to 67%, implying that there will be no further interest rate hikes despite analysts’ speculation to the contrary.
“The Central Bank considers that it has done enough tightening… We have to be patient and the commitment to go ahead,” said Şimşek, who showed his confidence in the government’s new economic programme and that it will yield results in the medium term. Just before the latest CPI increase in Turkey, Şimşek had acknowledged yesterday that inflation will remain high in the coming months due to underlying factors, before starting to decline in late 2024 or early 2025.
The Turkish Central Bank has since June 2024 raised interest rates by 3,650 points to 45%, but after the latest rate hike announced in January it considered the tightening cycle of its monetary policy to achieve lower prices in Turkey as completed; even so, it did not completely rule out further interest rate hikes in the future “if a significant and persistent deterioration in the inflation outlook is expected”.
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Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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