Turkish  journalist:  Questions that made Gaye Erkan sweat in JP Morgan investor conference

Reportedly, Central Bank Governor Gaye Erkan was sweating when faced with questions at the JP Morgan investor meeting she attended in New York, claims a well-connected Ankara pundit, Mr Erdal Saglam. Foreign investors wanted higher interest rates, as well as  asking whether  economy czar Mehmet Simsek will retain his post after local elections.


10News.net columnist  and longtime Ankara correspondent  Erdal Sağlam  stated that Central Bank Governor Hafize Gaye Erkan, who went to the investors meeting in New York without the Minister of Treasury and Finance Mehmet Şimşek, was asked very tough questions. The relevant sections of Sağlam’s article are as follows:


* At the investor meeting held in New York, we learned that Central Bank Governor Gaye Erkan faced many questions regarding the course of economic policies.

* While the primary question was whether Minister Şimşek would remain in office, some investors pointed out that the interest rates on bonds in Turkey were not attractive enough, citing the increasing bond interest rates in the USA as an example. Investors have stated that the interest margin in Eurobonds is not enough to take Turkey risk.

* Additionally investors complained that they did not have mechanisms to manage their risks when entering Turkey and requested that transactions between domestic and foreign banks be liberalized. In other words, they wanted the Swap market to be opened.

What about the interest rate increase?

According to the indirect information Saglam received from those who attended the meeting, which was not reflected to reports of news agencies, Gaye Erkan tried to reassure fund managers about the exchange rates, suggesting that there would be no sudden  movements as happened  countless times before.



She reiterated Central Bank view that “We are reaching the end of monetary tightening” but, assured attendants that  to combat inflation “whatever is necessary will be done, we are determined”.


Will Erdogan accept an additional interest rate increase?


“However, at this point”, writes Erdal Saglam,  “I believe that Central Bank Governor Gaye Erkan will need to give clearer messages that she will increase the interest rates if the anticipated policy rate of 45 percent  in the current tightening cycle is not enough to bring down price pressures”.


After the next  rate meeting, the Monetary Policy Committee will need to give at least the message that “tightening will continue if necessary, depending on the data.”

Bankers Erdal Saglam consulted think that 45% policy rate may not be enough  to stem the tide of inflation. His sources added  that additional measures such as increasing the required reserve ratio will need to be brought to the agenda in order to nudge TL deposit rates higher to stop dollarization.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.