LONDON, Nov 12 (Businesshala) – Investors need to see a clear and credible policy framework in Turkey, the president of the European Bank for Reconstruction and Development said, during a visit he held with President Tayyip Erdogan about high inflation. The issue was raised. ,
Odile Renaud-Basso, who visited the country this week, said she had “interesting discussions” on the policy mix with Erdogan, who is a proponent of lower interest rates to ease inflationary pressures.
“On the one hand he (Erdogan) has very strong results, like very strong growth, but inflation is also very high and we discussed it,” Renaud-Basso told Businesshala on Thursday.
She said she had also raised the fact that central banks globally were generally in a tight phase, leaving Turkey “on its own”.
Turkey’s central bank has stunned markets in recent months, slashing interest rates much faster than many anticipated, battling inflation close to the 20% level.
The lira hit a new record low on Friday, trading with the dollar level at 10 after losing more than 25% of its value since the start of the year. The currency has devalued more than 80% over the past decade, its weakness adding to inflationary pressures.
However, policymakers are expected to cut rates from 16% to 15% at their upcoming meeting on November 18, leaving the country with true negative rates.
Markets have long hinged on Turkey’s unconventional monetary policy making, as well as frequent personnel changes at the central bank, which have hurt the credibility of the policy.
“I said it is very important for long-term investors and for sustainable growth to have a clear framework, a credible framework and an appropriate policy mix,” Renaud-Basso said.
Turkey is the largest recipient of the EBRD fund, receiving 1.7 billion euros in 2020. Most owned by the G7 top economic powers, the EBRD invests in 38 economies including Egypt, Tunisia and Morocco in Central and Eastern Europe as well as Africa. (Reporting by Karin Strohecker; Editing by Andrew Heavens)