Turkey's new-look economic team met for the first time with dozens of international investors on Aug. 4 and pledged to continue hiking interest rates, even as economic growth slows, to head off rebounding inflation, two sources said.
According to the sources and a draft programme, the eight-hour meeting in Istanbul included Finance Minister Mehmet Şimsek and Central Bank Governor Hafize Gaye Erkan discussing monetary and fiscal policy and the economic outlook.
The face-to-face meeting with more than 40 investors marks a more transparent market turn by the authorities, and comes two months after President Recep Tayyip Erdoğan named Şimsek and Erkan to the positions to orchestrate a U-turn toward more orthodoxy.
The two sources, who requested anonymity to discuss details of the private meeting, said Şimsek stressed that reducing inflation was the priority and struck a confident tone that policy was returning to more normal settings.
He told investors that Erdoğan fully supported the monetary tightening and that "gradual" rate hikes would continue, pinching credit and leading to somewhat slower economic growth but not a sudden stop, one of the sources said.
The central bank under Erkan has raised its key rate by 900 basis points to 17.5% since June, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58%, meeting expectations.
Under the previous governor, the bank had slashed rates to 8.5% from 19% in 2021 in line with Erdoğan's unorthodox belief that high rates fuel inflation. That sparked a currency crisis and the lira weakened 44% in 2021, 30% in 2022, and another 30% so far this year.
Inflation touched a 24-year peak of 85.5% last October. It subsequently eased but then rose sharply again in July to nearly 48%.
Reuters reported on Thursday that Wall Street bank JPMorgan was hosting the investors meeting.
The programme obtained by Reuters showed Burak Dağlıoğlu, head of the presidency's investment office, was to give a presentation on Turkey as "your resilient investment partner".
Vice President Cevdet Yılmaz, Ziraat Bank CEO and Turkish Banking Association head Alpaslan Çakar, and the heads of Turkey's wealth fund and treasury debt office were also scheduled to speak, the programme showed.
JPMorgan declined to comment on the meeting. The central bank and finance ministry did not immediately comment.
Some foreign investors have edged back into Turkish assets since Erdoğan's re-election in May and subsequent U-turn, after a years-long exodus due largely to the unorthodox approach.
Since Erkan delivered a quarterly inflation report last week, investors have said they welcomed prospects of officials holding more regular meetings. The last in-person meeting with a Turkish central bank chief was in late 2022, they said.