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Turkey’s economic team holds first investor meeting since policy U-turn: report

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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, Reuters reported.

According to a preliminary program, the eight-hour meeting in İstanbul was to include Central Bank Governor Hafize Gaye Erkan discussing monetary policy and the economic outlook, and Finance Minister Mehmet Şimşek discussing fiscal policy.

The program obtained by Reuters also showed Burak Dağlıoğlu, 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 Recep Tayyip Erdoğan named Erkan and Şimşek 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 percent, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58 percent, in line with expectations.

Under the previous governor, the bank had slashed rates to 8.5 percent from 19 percent in 2021 in line with Erdoğan’s unorthodox belief that high rates fuel inflation. That sparked a currency crisis and the lira weakened 44 percent in 2021, 30 percent in 2022 and another 30 percent so far this year.

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