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BBC: Erdoğan is preparing for an economic U-turn

Turkish President Recep Tayyip Erdoğan, known for his sharp U-turns in foreign policy regarding countries such as Egypt, Israel, and Syria, is reportedly preparing for a similar shift in the economy. The British broadcasting corporation BBC has written that Erdoğan is “preparing for an economic U-turn.” Economists are expecting a significant interest rate hike by the Central Bank today, Bold Media reported.

It is stated that Recep Tayyip Erdoğan, the Turkish President from the ruling AKP party, who has made sharp U-turns in foreign policy regarding Egypt, Israel, Syria, and similar issues, is also preparing for a similar shift in the economy.

The British public broadcaster BBC wrote that Turkey is getting ready for a serious change in its economic policies.

In an analysis written by Paul Kirby, it was mentioned that a significant interest rate hike by the Central Bank is expected. The article also recalled that the US-based investment bank JP Morgan predicted an increase of 20%, while Goldman Sachs predicted 40%. The analysis pointed out that Erdoğan has removed three Central Bank governors who tried to adhere to orthodox economic policies in less than two years.

The news reported by Independent also included the evaluations of Özge Zihnioğlu from the University of Liverpool. The following comments by the academic regarding the expectation of an interest rate hike were highlighted: “Erdoğan has to do something about the economic situation. However, if he clearly adopts orthodox policies, it will affect a significant portion of society, and he would not want it to impact the local elections to be held next year.”

The article also indicated that the Turkish Lira has lost over 80% of its value in the last five years and that foreign investments have decreased. The views of Mehmet Kerem Çoban from Kadir Has University, as featured in the analysis, were also shared, stating that “Turkey’s economic model needs capital to survive because its reserves have depleted.”

Bloomberg, one of the leading media organizations in the United States, stated in a report published before the elections last month that the Central Bank intervened in the market by selling $177 billion to protect the Turkish Lira between December 2021 and April 2023.

While Erdoğan stated during his election campaign that he would not abandon his economic policies, it was noted that he appointed Mehmet Şimşek as the Minister of Treasury and Finance and Hafize Gaye Erkan as the head of the Central Bank after winning the elections. While Şimşek’s appointment was defended as a sign of transitioning to an economic policy in line with international norms, it was emphasized that Erkan, a well-known figure on Wall Street, would serve in Turkey for the first time.

Furthermore, the article mentioned that in a statement made last week, Erdoğan expressed support for the steps he wanted to take with Şimşek but stated that he did not intend to make significant changes in interest rate policies.

The Central Bank’s Monetary Policy Committee is expected to announce its interest rate decision for June at 14:00 after today’s meetings. A significant increase in interest rates is interpreted as a precursor to the U-turn.

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