Economy in Turkey: Important messages from Treasury Minister and Central Bank Governor

While the dollar / TL continues to rise around 27, the cabinet meeting chaired by AKP President Recep Tayyip Erdogan, the data agenda and treasury auctions will be followed in the markets today.

Foreign investors monitored the messages of Treasury and Finance Minister Mehmet Şimşek and Central Bank Governor Hafize Gaye Erkan at the JPMorgan meeting last week. More than 40 participants took part in the meeting.

Simsek told investors attending the meeting that his team had full political support and that they would continue to tighten gradually. Simsek also emphasized the front-loading fiscal policy and stated that the Maastrich criteria would be approached when earthquake-related expenses are deducted.

Simsek stated at the meeting that the economy would slow down due to the measures imposed on credit growth, but noted that they did not want an abrupt halt in the economy. Erkan, on the other hand, focused mainly on the issue of inflation in her presentation.

INFLATION IS ALSO EXPECTED TO INCREASE IN AUGUST AS WELL

While the CPI increased to 9.49 percent per month and to 47.83 percent per year, due to the increase in taxes and the sharp depreciation in TL, CPI is expected to increase significantly in August too as taxes will start in mid-July. CPI continues to rise towards 60 percent at the end of the year.

While the Treasury’s July cash balance is on the domestic data agenda today, the Treasury will re-issue 2- and 5-year fixed coupon bonds today. Treasury borrowing includes TLREF indexed bonds with a maturity of 4 years and a lease certificate with a maturity of 5 years tomorrow.