Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Economy

IMF urges Turkey to avoid repeat of bumper minimum wage hike

admin by admin
October 23, 2024
in Economy
0
IMF urges Turkey to avoid repeat of bumper minimum wage hike
0
SHARES
5
VIEWS
Share on FacebookShare on Twitter

By Karin Strohecker

WASHINGTON (Reuters) – Turkey should avoid a repeat of its last inflation-fuelling minimum wage hike when the next raise is due on Jan. 1 and focus on support measures for the poorest part of the population instead, the IMF’s mission chief for the country told Reuters.

Jim Walsh, speaking on the sidelines of the IMF World Bank annual meeting in Washington, also said talk of interest rate cuts was “probably premature”, given that sequential inflation was still running well above 2%.

Ankara is expected to announce in December by how much it will raise the minimum wage at the start of 2025 after delivering a 49% hike in January of this year, which pushed inflation sharply higher in the first quarter.

“We would hope that doesn’t happen this year, because we know from experience in many countries with high inflation that wage-setting like this at a national level is a big anchor for inflation expectations,” said Walsh.

“There’s a trade-off that the authorities have to make and they’re quite aware of it.”

Instead, Ankara should focus on developing social programs that will provide support for low-income households through cash transfers or through better targeting government support to help bolster the income of workers on lower wages, Walsh said.

Market expectations for the January minimum wage hike stand at around 25%, according to bankers.

Inflation climbed sharply in the wake of the last hike, hitting a peak of 75% in May, but has been slowing since and fell to 49.4% in September – dipping for the first time in the current cycle below the benchmark interest rate of 50%.

Turkey’s central bank held rates in October and warned a bump in recent inflation data lifted uncertainty, a hawkish signal that could reinforce views that policy easing will not begin until next year.

While financial conditions had already tightened, Walsh said the central bank should further strengthen its communication and that more rate hikes may be necessary if the bank really wanted to hit its inflation target of 14% by year-end 2025.

“The central bank has often sounded hawkish, and they say that they will keep rates where they are until they see that sequential inflation is on a downward trend,” said Walsh.

However, markets were still ripe with speculation about when the central bank would begin to lower rates, he said.

“When sequential inflation is still running at 2.5% a month, talk of cutting is probably premature.”

The IMF expects inflation to stand at 24% by the end of next year – broadly in line with a Reuters poll that predicted inflation would fall to 25% by then.

Turkey’s central bank is expected to wait until December or January to cut interest rates, according to a Reuters poll this month, as economists abandoned predictions of an earlier move. It is forecast to cut rates by 20 points to 30% by end-2025.

A mix of unanchored inflation expectations and large energy import needs made Turkey more vulnerable to a quicker and broader feed-through to inflation from possible energy shocks, Walsh said, adding the country could counter that by ramping up renewable energy production.

The IMF would also encourage Turkey to push ahead with further reducing costly energy subsidies, Walsh said, while buffeting poorer households against the fallout.

“The sooner you do it, the more money you save from reforming the subsidies.”

This post appeared first on investing.com

Previous Post

CME Group profit jumps on record trading strength

Next Post

Earnings call: Lockheed Martin reports strong demand in Q3 2024

admin

admin

Next Post
Earnings call: Lockheed Martin reports strong demand in Q3 2024

Earnings call: Lockheed Martin reports strong demand in Q3 2024

Trending News

IAG share price surges on record €4.4bn profit, but business travel outlook dims

IAG share price surges on record €4.4bn profit, but business travel outlook dims

February 28, 2025
Tesla loses market share in Europe as Volkswagen and BMW dominate EV sales

Tesla loses market share in Europe as Volkswagen and BMW dominate EV sales

March 24, 2025
ECB to apply Danish compromise on insurers case by case, says Buch

ECB to apply Danish compromise on insurers case by case, says Buch

December 17, 2024
Subscribe to Insightful Word


    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025
    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    June 6, 2025
    Starlink reportedly secures key licence in India, moves closer to launching services

    Starlink reportedly secures key licence in India, moves closer to launching services

    June 6, 2025

    Recent News

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll

    June 6, 2025
    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more

    June 6, 2025

    Latest News

    • China’s May export growth seen slowing to 5.0% amid trade uncertainty: Reuters poll
    • FTSE 100 Index shares of 2025: Rolls-Royce, Fresnillo, BAE, and more
    • Asian stocks end mixed: Hang Seng snaps winning streak, Nikkei jumps 0.5%

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.