Turkiye to tighten fiscal policy more to help trim inflation, Simsek says

The Turkish government will continue to tighten fiscal policy to help the central bank reduce inflation, Finance Minister Mehmet Simsek said on Monday, also highlighting the agency Fitch’s upgrade of the country/s sovereign rating.

In comments on social media platform X, he said Turkiye was committed to maintaining sound policies and implementing structural reforms, while attaining price stability remained its top priority.

Annual inflation rose to 67 percent in February, above expectations and maintaining pressure for tight monetary policy. Economists expect it to decline to around 40 percent by year end.

“The CBRT is committed to anchoring inflation expectations using all the tools at its disposal. We will continue to tighten fiscal policy to help the CBRT reduce inflation,” Simsek said.

The lira weakened further on Monday, hitting a fresh record low of 32.0075 against the dollar to bring its losses this year to nearly 8 percent.

Fitch raised Turkiye’s rating to “B+” from “B” on Friday, saying tighter approaches to monetary policy were helping combat inflationary trends.

After President Tayyip Erdogan’s re-election in May, Turkiye abandoned its unorthodox low interest rate policy in favour of tightening, raising its key rate to 45 percent from 8.5 percent since June.

Turkiye is expected to take more policy steps to cool inflation after local elections on March 31, setting the stage for more pain for Turks already struggling after years of soaring prices, according to data and some economists.