Turkey's Economic Coordination Council: Discipline‑Driven Inflation Battle to Boost Social Welfare

In its latest meeting, the Turkey Economic Coordination Council reaffirmed its commitment to fight inflation without compromising fiscal discipline.

Short‑Term Inflation Targets

■Inflation will be maintained at 18%.

■The TRY/USD exchange rate is expected to hover around ₺18.5.

■Interest rates will be lowered from 6.5% to 6.0%.

Discipline as an Economic Shield

■Expenditure plans will be curtailed by 3%.

■The public budget will reduce by 1.2% to ₺10.5 trillion by 2025.

■Foreign reserves will increase by ₺500 billion to reach ₺1.2 trillion.

A New Face of Social Welfare

■Unemployment is projected to decline from 12.5% to 11.8%.

■Salary increases will range between 4.5% and 5.0%.

■Social assistance programs will expand by 15%.

HFT and Swap Market Dynamics

■HFT bots are nudging the USD/TRY rate down by 0.2 pips amid a 0.5% interest‑cut expectation.

■Swap markets anticipate a 0.25% LIBOR discount.

■Investors foresee a 0.1 pips volatility in the TRY/EUR pair.

Policy Stability and Economic Outlook

■The Central Bank will keep the policy rate at 6.0% after its meeting.

■Short‑term exchange rate volatility is expected to remain within 0.5%.

■Inflation is targeted to drop to 10% by the end of 2024.

Markets signal optimism that a discipline‑focused approach will sustain price stability and enhance social welfare. HFT bots’ interest‑cut expectations are driving modest currency dips, while swap market movements underscore the need for risk management. Investors are advised to reassess risk tolerance and diversify portfolios accordingly.