Turkey’s new-look economic team met for the first time with international investors on Friday, with questions over how far it will hike interest rates to head off rebounding inflation high on the agenda.
According to a preliminary programme, the eight-hour meeting in Istanbul was to include Central Bank Governor Hafize Gaye Erkan discussing monetary policy and the economic outlook, and Finance Minister Mehmet Simsek discussing fiscal policy.
The programme obtained by Reuters also showed Burak Daglioglu, head of the presidency’s investment office, was to give a presentation on Turkey as “your resilient investment partner”.
Reuters reported on Thursday that Wall Street bank JPMorgan was hosting the meeting, which comes two months after President Tayyip Erdogan named Erkan and Simsek to the top positions to orchestrate a U-turn toward more orthodox policies.
The central bank under Erkan has since raised its key rate by 900 basis points to 17.5%, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58%, in line with expectations.
Under the previous governor, the bank had slashed rates to 8.5% from 19% in 2021 in line with Erdogan’s unorthodox belief that high rates fuel inflation. That sparked a currency crisis and the lira weakened 44% in 2021, 30% in 2022, and another 30% so far this year.
Inflation touched a 24-year peak of 85.5% last October. It subsequently eased but then rose sharply again in July to nearly 48%, data showed on Thursday.
Also scheduled to speak on Friday were Vice President Cevdet Yilmaz, Ziraat Bank CEO and Turkish Banking Association head Alpaslan Cakar, and the heads of Turkey’s wealth fund and treasury debt office.
JPMorgan declined to comment on the meeting. The central bank and finance ministry did not immediately comment.
Some foreign investors have edged back into Turkish assets since Erdogan’s re-election in May and subsequent U-turn, after a years-long exodus due largely to the unorthodox approach.
Since Erkan delivered a quarterly inflation report last week, investors have said they welcomed prospects of officials holding more regular meetings. The last in-person meeting with a Turkish central bank chief was in late 2022, they said.
Reporting by Jonathan Spicer; Additional reporting by Karin Strohecker in London; Editing by Daren Butler and John Stonestreet