EBRD head urges Turkey to continue inflation fight, eyes power project

By Jonathan Spicer

ISTANBUL, March 5 (Reuters) - The head of the European Bank for Reconstruction and Development told Reuters on Thursday that Turkey must "stay on course" in its inflation fight, and she applauded steps taken by the central bank this week to address market fallout from the war in the Middle East.

Odile Renaud‑Basso, the EBRD's president, said the bank's investment in Turkey will remain "very high" this year, and that it was looking into potentially funding a big-ticket high-voltage electricity transmission system that Ankara plans over the coming decade.

"The central bank has already taken some measures very quickly," Renaud‑Basso said. "There is still some way to go and what is important is to stay on course and really finish this work," she said in an interview at the EBRD's offices in Istanbul.

REASSURING MEETINGS WITH OFFICIALS

Renaud-Basso was speaking at the end of a four-day visit that included meetings with Finance Minister Mehmet Simsek and Vice President Cevdet Yilmaz.

"Everything I heard reassured me (that) this progress is steady," she said of inflation-fighting measures.

Turkey's central bank has slashed interest rates by 900 basis points since mid-2025 to 37% as annual inflation slowed from over 40% at the beginning of last year to just over 30% in January.

But a rise to 31.5% last month signalled a slowdown in disinflation, and an escalating U.S.-Israeli war with Iran threatens to drive prices higher.

In response, the central bank already took a series of steps this week, including some $8 billion in foreign currency sales on Monday, pushing the market overnight rate to about 40%.

Asked about Ankara's plans to invest some $30 billion in a high-voltage electricity transmission system over the next decade, Renaud-Basso said the EBRD is "looking into that."

"It's part of the discussion we have with the government," she said.

The EBRD committed last year a record 2.7 billion euros to 54 projects in Turkey, which is the number-one recipient of EBRD's funds. This year's funding could also include energy and renewables projects.

Turkey aims to quadruple renewable energy generation capacity by the end of 2035 and build new nuclear power plants. The planned network would transfer electricity to consumption centres and also send surplus electricity to its European neighbours.

Turkey has said it is in talks with the World Bank to secure up to $6 billion of funding for upgrading electricity transmission infrastructure.