(Bloomberg) — Turkey's finance chief, who has led a policy review since May's national elections, said Turkey's central bank has the independence to take necessary steps to curb inflation.
“The central bank has a free hand, so to speak. The central bank will do whatever it takes to control inflation,” Finance and Finance Minister Mehmet Simsek told the Kanal 7 TV channel on Sunday.
Central bank officials appointed to seek a return to mainstream policymaking after President Recep Tayyip Erdogan's re-election have recently focused on alternative tightening measures, criticized for appearing to depart from orthodoxy. is calling.
For bankers and economists, the approach is becoming reminiscent of his predecessors, when policymakers introduced more regulations instead of raising interest rates to comply with Erdogan's wishes.
Simsek said the president supports a new program that includes “normalization” of monetary policy, saying previous policies “weren't working.”
Turkey's central bank has raised interest rates from 8.5% to 45% at eight policy meetings in a bid to curb soaring inflation, and has vowed to tighten them further if the price outlook worsens.
The central bank's Monetary Policy Committee will hold a meeting to decide on interest rates on March 21 amid growing calls to raise the benchmark again.
Analysts at Goldman Sachs Group Inc. said raising interest rates would demonstrate the central bank's ability to act on its own authority and avoid any interpretation that it is backsliding in an unorthodox direction.
Turkey's monthly inflation rate, a key indicator for policymakers, was worse than expected last month, but could be “compensated for with additional tightening measures,” Simsek said, but in an interview. He emphasized that the central bank determines monetary policy.
Read more: Turkey's inflation spiral, 70% worried about peak interest rates
Until his re-election in May, President Erdogan championed ultra-low borrowing costs and prioritized economic growth through cheap credit.
This has triggered an inflation crisis and led to the appointment of more pro-market officials, including Simsek, who are seeking to bring inflation down to single digits by restoring investor confidence and putting the country back on track.
“The essence of the program is disinflation, raising the inflation rate to single digits,” Simsek said.
See more articles like this at bloomberg.com
©2024 Bloomberg LP
Unlock a world of benefits! From insightful newsletters to real-time inventory tracking, breaking news and personalized newsfeeds, it's all here, just a click away. Log in here!
