Jun 06 2018

Turkey made no promises about rate hikes, deputy PM says

Turkey’s government gave no promises to investors about rate hikes during meetings last week, Deputy Prime Minister Mehmet Şimşek said.

Concern about Turkey’s monetary policy has largely been dealt with during the briefings, Şimşek said, according to Vatan newspaper.

“We made no pledges (about rate increases) in the London meetings,” he said.

Turkey’s inflation rate climbed to 12.2 percent in May from 10.9 percent the previous month, government data showed on Monday. Higher inflation is raising speculation that the central bank will increase interest rates at a meeting on Thursday, following a 300 basis-point hike last month.

Funds have begun flowing back to Turkey following the London meetings, Şimşek said, according to Vatan.

Şimşek and Central Bank Governor Murat Çetinkaya told investors that the central bank was ready to raise interest rates again if needed and Turkey was committed to monetary policy in line with norms in the global financial system.

Turkish President Recep Tayyip Erdoğan has opposed hikes in interest rates in the past, saying they are inflationary. Erdoğan's approval was sought before the central bank belatedly raised rates last month as the lira sunk to a record low, Bloomberg reported at the time, citing a person with knowledge of the situation.

Turkey's government faces presidential and parliamentary elections on June 24.