Türkiye's Simsek Says Disinflation to Continue, FX Pass-through Limited

A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
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Türkiye's Simsek Says Disinflation to Continue, FX Pass-through Limited

A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)

Turkish Finance Minister Mehmet Simsek said on Friday that disinflation would continue despite some recent deterioration in expectations, adding that the government still sees inflation ending the year within its target range.

His remarks come a day after the central bank delivered a surprise 350 basis-point rate hike to 46%, reversing a short-lived easing cycle and signaling renewed commitment to tackling inflation.

The move followed weeks of market turmoil triggered by the March arrest of Istanbul Mayor Ekrem Imamoglu, President Recep Tayyip Erdogan's main political rival.

"The recent deterioration in expectations may have had some effect, but we believe we will stay within the target by year-end," Simsek said.

The central bank's unexpected hike marked a shift from the easing that began in December, aiming to anchor inflation expectations and stabilize markets.

Economists expect the lira's recent weakening to feed into April and May inflation, though annual inflation slowed to 38.1% in March. The bank's year-end forecast remains at 24%.

Simsek also said the impact of exchange rate pass-through on inflation would remain limited due to weak domestic demand, and noted that recent financial market volatility could cause a temporary slowdown in economic activity.

"We are approaching a threshold where we can achieve moderate growth without generating a current account deficit," he added.

The lira had plunged to a record low and Turkish assets took a hit before the central bank intervened with reserve sales and tighter funding conditions.

The bank said the recent market turbulence was expected to slightly lift April inflation readings and reiterated that further tightening would be considered if inflation risks persist.



Gold Holds in Narrow Range as Spotlight Shifts to US Jobs Data

FILE PHOTO: 24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013.  REUTERS/Shannon Stapleton/File Photo
FILE PHOTO: 24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton/File Photo
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Gold Holds in Narrow Range as Spotlight Shifts to US Jobs Data

FILE PHOTO: 24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013.  REUTERS/Shannon Stapleton/File Photo
FILE PHOTO: 24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton/File Photo

Gold prices were stuck in range-bound trade on Thursday as investors awaited US non-farm payrolls data that could influence the Federal Reserve's timeline for interest rate cuts.

Spot gold edged down by 0.1% to $3,352.59 an ounce by 0801 GMT. US gold futures rose 0.1% to $3,363.10.

"Gold is looking for new triggers," said WisdomTree commodities strategist Nitesh Shah.

"We had slightly weak ADP data that could potentially point to a little bit of weakness in underlying labor markets, which has been a little bit of a support for gold, but the non-farm payrolls could be a trigger point later."

Data released by ADP showed US private payrolls dropped by 33,000 jobs in June, marking the first decline in more than two years.

The non-farm payrolls report due at 1230 GMT on Thursday is expected to show an addition of 110,000 jobs in June, down from 139,000 in May, according to a Reuters poll.

US equities climbed to record highs after President Donald Trump announced that the US has struck a trade deal with Vietnam, including a 20% tariff on exports to the United States. He has also expressed optimism about a deal with India.

"More trade deals at lower tariffs could build some confidence that inflation will remain benign, thus allowing the Fed to ease monetary policy," ANZ analysts said in a note.

Non-yielding gold tends to perform well when interest rates are low and during times of political and financial uncertainty.

In other precious metals, spot silver rose 0.1% to $36.93 an ounce and platinum was steady at $1,417.85, hovering near a more than 10-year high hit last week, while palladium was up 0.1% at $1,155.97.