Türkiye is bearing the fruits of new policies as capital inflows have accelerated since the second half of 2023, President Recep Tayyip Erdoğan said on Friday, after the government shifted toward more conventional policymaking after the May elections.
After the vote, Erdoğan named a new Cabinet and appointed respected policymaker Mehmet Şimşek as Treasury and Finance minister and former Wall Street banker Hafize Gaye Erkan as central bank governor.
The administration delivered aggressive tightening aimed at arresting inflation, reducing chronic current account deficits, rebuilding foreign exchange reserves and stabilizing the Turkish lira.
Since June, the central bank has hiked its benchmark policy rate by 3,400 basis points to 42.5% to rein in inflation that neared 65% last month.
The bank says it will halt the aggressive rate hikes as soon as possible but maintain tight monetary policy as long as needed.
"Despite the risks, we see that the decisions made in the economy are starting to bear fruit," Erdoğan told an event in Istanbul.
"Capital inflows have accelerated in the last six months. Our reserves have strengthened. Exchange rate volatilities have decreased. Financing conditions have improved," he noted, stressing that the central bank's reserves reached the highest level in history.
Erdoğan also reiterated his support for the economic administration and its policies.
"We have always provided and are providing the necessary support to our colleagues to whom we entrusted the economic management," he said.
"We have full confidence in them and their policies."
Erdoğan said they were making "intensive efforts" to solve the inflation issue and stressed the downward trend in consumer prices is expected to gain momentum in the second half of 2024.
"The decreasing trend in both core and headline inflation is consistent with our medium-term program. The decline in inflation will be more strongly felt in the second half of the year," said the president.
"I believe that the coming year will witness positive developments that will surprise everyone in this regard."
