Central Bank’s rate-setting meeting to be held this week

ANKARA

All eyes will be on the Central Bank this week when the Monetary Policy Committee (MPC) is set to meet on June 22 to decide about the policy rate.

Most analysts expect the Central Bank to deliver a rate hike at the meeting after Mehmet Şimşek, who said that the country needs to return to “rational ground” in its economic policies, was appointed to the finance minister post in the new cabinet.

Şimşek on June 16 held separate meetings with members of the Turkish Industry and Business Association (TÜSİAD) and representatives of the Banks Association of Türkiye (TBB).

“We will continue on our path with a model that will boost prosperity, investment, exports, and employment,” Şimsek said after the meetings.

Change at the helm of Central Bank

In the wake of the government reshuffle, Hafize Gaye Erkan replaced Şahap Kavcıoğlu, who had followed a policy of cutting interest rates, as the Central Bank governor.

Analysts differ on how big the rate hike the bank will deliver could be, some putting the figure at 20 percent.

The Central Bank’s monthly survey published on June 16, however, showed that the MPC is expected to lift the one-week repo auction rate to 17 percent.

“We agreed [for Şimşek] to take the steps he will take quickly and easily, together with the Central Bank,” President Recep Tayyip Erdoğan told reporters on June 14 on his way back to Türkiye from a visit to Azerbaijan, voicing his support for the new finance minister.

Erdoğan, however, added that people should not assume that he had made a “serious change” in views regarding interest rates.

The president has long argued that high interest rates cause high inflation.