Turkey: Emerging markets must attract foreign capital if Fed raises interest rates

ANKARA, Turkey, Sept. 6 (UPI) — Turkish Deputy Prime Minister Cevdet Yilmaz on Sunday said emerging markets must attract foreign capital if the U.S. Federal Reserve raises its interest rates.

After deciding against such a move in July, Fed chief Janet Yellen said, due to improvements in the U.S. economy, the central bank could raise interest rates sometime during 2015. This would end nearly a decade of monetary easing that provided an inflow of cheap money into the world’s economy in order to counter the global financial crisis.

“The emerging world is aware of this development, so many countries, including Turkey, are taking steps to increase our attractiveness as a market for global capital,” The Wall Street Journal quoted Yilmaz as saying during a press conference attended by officials with the Group of 20 major economies.

The deputy prime minister added it was not clear how such a rate hike would impact emerging markets.

Yilmaz said Turkey would take steps to streamline its business environment through structural reforms, adding that the country’s financial discipline — dropping its public debt from 33 percent to 30 percent of gross domestic product in 2015 — will be an advantage in the case of a rate increase.

The Fed’s Federal Open Market Committee (FOMC) is scheduled to meet Sept. 16 and 17, when experts have anticipated the first raise in interest rates.

However, data from an August jobs report showed 45,000 less positions than the expected 220,000. Over the past year, job growth has averaged 247,000 per month. As well, instability in the world market — including volatility in the Chinese stock market — has added to doubts about the Fed’s timeline.

“A bumper payrolls number would have sealed the case for higher interest rates in many people[‘s] minds, while a low number would have dealt a blow to any chances of tightening of policy at the next meeting,” the Christian Science Monitor quoted MarkIt economist Chris Williamson as writing in an email analysis. “Instead, we had something in the middle.”