Turkey to tackle inflation after price spiral – minister

Turkey will tackle inflation after President Recep Tayyip Erdoğan’s new economic team is announced next week, Economy Minister Nihat Zeybekçi said.

The country’s central bank will take the steps needed on interest rates and measures will be taken to address a spiral in the price of some goods, Zeybekçi said, according to Hurriyet newspaper.

Turkey’s inflation rate surged to 15.4 percent in June from 12.2 percent in May, the highest level since 2003, meaning that price increases are now about four times the average for major emerging markets. Investors are selling the assets of less stable developing countries in particular as the Federal Reserve raises interest rates, meaning Turkey needs to take measures to rebalance its economy.

The central bank has raised interest rates by 500 basis points this year to 17.75 percent, with 425 basis points of increases coming belatedly in May and June after the lira sank against the dollar. Stimulus measures by Erdoğan’s government have raised concern that the economy is overheating and headed for a hard landing.

Zeybekçi said he didn’t know whether he would have a role in Erdoğan’s new team of ministers and advisers, which the president is due to announce on Monday. Erdoğan has the sole power to make that decision after he was re-elected on June 24 with enhanced executive powers, Zeybekçi said.

The economy minister, formerly the mayor of the Turkish city of Denizli, is a long-term friend and ally of Erdoğan, whose governing party was elected in 2002 in the aftermath of a financial crisis that had pushed inflation to more than 70 percent.