Turkey’s Treasury and Finance Minister Mehmet Simsek has indicated he will take gradual steps in steering toward more conventional policies, as the nation looks to restore investor confidence.
A former Merrill Lynch strategist, Simsek signaled in two meetings with bankers and business people on Friday that adjustments will be made slowly to avoid unwanted side-effects, according to people familiar with the matter, who declined to be identified as the talks were private.
Any steps will be taken after analyzing their potential effects on the economy and sectors, Simsek said in the meetings, the people said.
The Treasury and Finance Ministry declined to comment.
Simsek rejoined President Recep Tayyip Erdogan’s cabinet after the Turkish president secured another five-year term in a May 28 runoff vote. Viewed as a market-friendly choice, his appointment has been seen to signal a shift from unorthodox measures that have been blamed for Turkey’s soaring inflation and an exodus of foreign money.
In his first speech after the appointment, Simsek stressed there was no option left for Turkey other than a return to conventional polices.
The central bank’s rate decision on Thursday could be a litmus test for the new team. Economists see the monetary authority, with its new governor Hafize Gaye Erkan, raising rates steeply at its meeting. The median estimate is the rate will be raised to 20% from 8.5% in a Bloomberg survey of 20 economists.
BofA, Goldman Differ on Size of Expected Turkish Rate Increase
Turkey’s benchmark Borsa Istanbul 100 Index fell 3.8% on Monday, extending its decline after the new finance minister signaled a gradual shift to orthodox policies. The index marked the biggest drop in a month.
(Market reaction added in last paragraph.)
