Fresh evidence of stubbornly high U.S. inflation this week was unwelcome news for the Federal Reserve, not to mention consumers, raising concerns that price pressures are spreading beyond the one-off effects of tariffs and high gasoline prices into the broader economy. That could mean mortgages, credit cards and other forms of borrowing are likely to become increasingly expensive.

Tuesday’s consumer price index report showed broadly rising costs across a range of goods and services, some with little connection to more expensive oil and gas or surging investment in artificial intelligence data centers, another factor blamed for worsening inflation. And there is increasing anxiety among Fed officials that higher oil prices stemming from the Iran war may last longer than previously thought.

A key issue debated by Fed policymakers for months has been whether inflation would cool on its own if the Iran war ended and oil prices fell and as the impact of tariffs faded. But government data suggested inflation rose to 4% in October compared with a year ago, up from 3.7% in September, even as gas prices leveled off.

The potential consequences of the new inflation data emerged immediately. Two Fed officials suggested Tuesday that the central bank may have to hike its key interest rate more quickly to tame inflation. Bigger or faster hikes by the Fed would mean that buying a house or a car, or paying off a credit card would become a steeper hill to climb, with millions of Americans already struggling to make ends meet.

Lorie Logan, president of the Federal Reserve Bank of Dallas and a voting member of the Fed’s rate-setting committee, said Tuesday that price increases remain high for services such as “visits to the doctor, childcare, dining out and hotel stays.”

“Prices for these services aren’t particularly sensitive to tariffs, conflict in the Middle East or surging demand for computer chips,” she added. “While I expect inflation to moderate as price pressures dissipate in energy and manufactured goods, the broader inflationary trend is more likely to persist.”

Logan said Tuesday she supported two additional quarter-point rate hikes. While she has made similar statements before, Logan added that the Fed could “move more rapidly this winter” than it “has moved so far this fall,” signaling that she may support two rate hikes in a row, a quicker pace than the Fed’s current approach.

At its last meeting in late October, the central bank kept rates unchanged at about 3.9%. Chairman Kevin Warsh declined to suggest whether more increases were likely. The central bank hiked rates at its September meeting.

Wall Street investors now see 90% odds that the Fed will lift borrowing costs at its next meeting Dec. 8-9, according to futures prices tracked by CME Fedwatch. Expectations for a second hike at its January meeting tripled between Monday and Tuesday, to more than 64%.

Some Fed officials had expressed optimism over the summer that once the shocks from tariffs and high gas prices faded, inflation would retreat without Fed intervention.

But Anna Paulson, president of the Philadelphia Fed, poured cold water on that view in a speech late Tuesday.

“Underlying inflation is above target, and it hasn’t come down,” she said. “That tells me that elevated inflation isn’t just about factors that will go away on their own.” Still, she also said she supported only gradual rate increases.

Tuesday’s inflation report showed prices rising in many areas with little connection to energy costs or AI, including streaming video services, beef and auto insurance.

But surging investment in data centers has driven up the cost of computer chips, power generation equipment, and copper, among other components, with little sign of easing. Prices for smartphones jumped 1.4% just from September to October, the government said, the largest such increase on record.

Computer prices leapt 0.5% last month, and television prices rose 3.3%, reversing the more typical trend in which those prices fall with technological innovation.

The Fed’s focus on inflation’s spread isn’t entirely new. In late August, Chair Kevin Warsh called attention to data showing that most goods and services were experiencing notable price increases. His speech at the Fed’s Jackson Hole symposium signaled that the central bank would hike rates for the first time in three years the following month.

There has been little improvement in inflationary trends since then. On Tuesday, even before October’s inflation figures were released, Fed governor Christopher Waller noted in a speech in London that 70% of services prices rose by 3% or more in September from a year earlier.

Waller also said that if monthly core inflation – which excludes food and energy prices – were to reach 0.3% or higher in October, the Fed should consider a half-point interest rate increase next month, double the size of the usual hike.

As it turned out, that’s exactly how much core inflation increased.

Even as oil prices have fallen steadily since the beginning of the month, as President Donald Trump has suggested fighting could end in the Middle East, Waller noted that energy costs in the U.S. could remain high.

The cost of insuring oil tankers traveling through the Strait of Hormuz and taking other steps to avoid attacks has added as much as $20 to $30 a barrel to oil prices, Waller said. Diesel fuel prices will also likely stay high because of a lack of refining capacity, some of which has been destroyed in the Ukraine war, he added.

And while the price of a barrel of oil has slid more than 5% over the last 30 days, it still costs about $30 more than it did at this time last year.

In a Tuesday speech at the Council on Foreign Relations, Fed governor Michelle Bowman suggested that inflation may be getting worse, saying that, “price pressures had been concentrated in a few categories, but the latest data suggest that these pressures may be broadening.”

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The European Bank for Reconstruction and Development (EBRD) announced Wednesday that it plans to invest $6 billion over the next five years in projects under Türkiye’s Renewable Energy Acceleration and Clean Transition Platform (REACT).

The platform was launched on the sidelines of the COP31 climate conference in Antalya, with the EBRD joining as an initial signatory after helping shape the initiative alongside Türkiye’s Energy and Natural Resources Ministry.

REACT aims to mobilize $300 billion by 2040 across renewable generation, grid infrastructure, energy storage, flexibility solutions, manufacturing and electrification, in line with COP31’s 35-by-35 Global Electrification Pledge.

The initiative will support Türkiye’s ambition to reach 175 gigawatts of installed solar and wind capacity by 2040.

REACT is designed as a coordination and investment-mobilization framework. It brings together public institutions, development partners, financial institutions, investors, the private sector and other stakeholders around a shared implementation agenda.

EBRD President Odile Renaud-Basso said the bank would draw on its experience in Türkiye’s energy sector to support the transition through investment and expertise.

“Türkiye has set ambitious targets for its energy transition,” Renaud-Basso said.

She welcomed the country’s determination to turn those ambitions into investment and action, highlighting cooperation with Turkish partners and the bank’s experience with Türkiye’s Industrial Decarbonization Investment Platform.

Other supporters include the European Union, World Bank, International Finance Corporation (IFC), Glasgow Financial Alliance for Net Zero (GFANZ), Climate Investment Funds (CIF), Germany’s KfW development bank and the U.N. Industrial Development Organization (UNIDO).

The EBRD is among Türkiye’s largest institutional investors, having invested more than 26 billion euros (nearly $29 billion) in the country, predominantly in the private sector.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The head of the Turkish banking watchdog said Wednesday that he had submitted his resignation after allegations, which he denied, of ‌the authority’s links to the country’s investment fund turmoil.

“In light of the recent allegations concerning the Banking Regulation and Supervision Agency (BDDK) and myself, I asked our esteemed President Recep Tayyip Erdoğan for permission to step down,” Şahap Kavcıoğlu said.

He said that he had taken the step so that “our ​Agency would not suffer any further damage.”

Kavcıoğlu was reported as denying allegations in the media ​that he had money invested in investment funds under ​investigation or had taken bribes, saying that the BDDK had nothing ‌to ⁠do with the fund crisis.

Senior BDDK officials were detained over the weekend and subsequently jailed pending trial as part of an investigation into transactions carried out in capital ​markets involving investment ​funds.

In September, ⁠regulators ordered the liquidation of 131 funds managed by seven asset managers following warnings ​by some that they could not meet ​redemption payments.

The ⁠funds had reached more than $20 billion in assets over just three years, as nearly half a million investors. Authorities are probing over 400 suspects.

The granting of banking licenses to certain companies and groups, which have been mentioned in a recent investigation conducted by the Istanbul Chief Public Prosecutor’s Office into transactions within the capital markets, has become a subject of controversy.

Kavcıoğlu previously served as governor of the Central Bank of the Republic of Türkiye (CBRT) between 2021 and 2023.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Spanish workers launched a general strike on Wednesday, setting up picket lines across the country in a mass ⁠protest largely against the country’s housing affordability crisis. The strike comes a few ⁠weeks before a snap general election.

It is the first general strike in 14 years to be jointly backed by Spain’s two largest unions, UGT and CCOO, as well as other labor organizations ​and tenants’ associations angry about rising rents and evictions.

“We won’t stop until ​we ⁠transform this country’s housing model from top to bottom so that houses are for living instead of being at the service of the rentier minority,” said Alicia del Rio, spokesperson for the Madrid Tenants’ Union, as the strike began at midnight.

Spain has a deficit of about 750,000 homes, which is set to grow to more than a million by 2028, according to the central bank.

With fewer people able to afford a home, renting has increased sharply, putting pressure on that market. The average rental price of 1,176 euros ($1,315) is equivalent to about 98.7% of a young person’s average monthly salary in Spain, according to the Youth Council of Spain.

Early turnout strongest as ports, auto plants

Plans for massive protest marches in the afternoon were threatened by two storms, dubbed ⁠Charles ⁠and Bruna, that led weather agency AEMET to issue alerts for 14 regions over strong winds, rough seas and heavy rains.

According to UGT and CCOO, early participation in the strike reached 90% at ports and in the automotive sector, with “total stoppages” reported at factories including Volkswagen’s in Navarre and SEAT’s in Barcelona.

The unions also put early turnout at 85% in the meat industry, 82% in waste collection and 75% in the energy sector. They said participation was lower in healthcare and social services, at 38%, and at 35% in the postal service.

Tensions flared at the start of the strike at Madrid’s Mercamadrid wholesale ⁠market, where about 1,000 protesters gathered. CCOO’s Madrid branch said on X that police fired pepper spray at pickets and arrested one of them, with 13 people requiring medical attention.

A police spokesperson confirmed the arrest but not the use of pepper spray, although ​he said it was used to disperse a separate picket line in the Carabanchel district.

Election gamble

The strike follows ​weeks of demonstrations and encampments provoked by the eviction and subsequent death of an 87-year-old woman in Madrid.

Those protests, along with parliament’s rejection last month of government decrees aimed at curbing evictions ⁠and limiting rent pressures, ‌prompted Prime ‌Minister Pedro Sanchez to call an election for Nov. 29.

The government has ⁠largely blamed the right-wing opposition running many regions and municipalities for ‌rising rents and insufficient housing supply.

Sanchez, whose Socialist Party lags in opinion polls, hopes to harness voter resentment over housing and shift ​the political narrative away from a series of ⁠corruption cases involving his inner circle and a deadly train crash last ⁠month.

But union leaders and many of the protesters have said they also hold the central government responsible for ⁠the housing crisis, as well ​as for Spain’s second fatal train crash this year.

On Tuesday, train drivers walked out to demand more investment in maintenance and safety, causing widespread travel disruption.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Türkiye will keep investing in renewable energy to decarbonize its energy system and expand electrification, Treasury and Finance Minister Mehmet Şimşek said Wednesday.

Şimşek said the greater challenge is finding the money for such ambitious goals, and that public funds alone will not be enough.

He was speaking at a session on the sidelines of COP31, the U.N. climate conference being held in Antalya, a Mediterranean resort province in southern Türkiye.

Şimşek said calculations show that about $300 billion would be needed to reach the goal of decarbonizing Turkish industry. “We believe this can be achieved, but the key questions to answer are how much it will cost and how it will be financed,” he said, according to a Turkish transcript of his speech reported by Anadolu Agency (AA).

He said Türkiye’s fiscal position is strong. Even though more than $100 billion was spent on rebuilding infrastructure after the devastating early 2023 earthquakes, Şimşek said Türkiye’s budget deficit is about 3% of gross domestic product (GDP).

Public debt is about 22% of GDP, which he called modest, so the government has significant fiscal room.

To close the gap, he said, Türkiye needs the support of multilateral development banks such as the World Bank and the European Bank for Reconstruction and Development (EBRD), as well as the International Finance Corporation (IFC).

The aim is not only to borrow from them but to mobilize private capital and reduce investment risks, Şimşek said. By providing guarantees and taking on risk, the banks can open the way for private investment, he added.

Net zero by 2053

Şimşek called 2026 an extremely difficult year, saying the world had faced the biggest energy supply shock in recent history, with significant macroeconomic effects. He said the 2053 net-zero target is very important to Türkiye.

“We are an emerging market and a growing economy, so we have to keep growing. But can you decarbonize while you grow? Can you build your green industry? Those are the questions ahead of us,” he said.

On energy, Şimşek said Türkiye aims to have 175 gigawatts of solar and wind power by 2040. He said a low-carbon path is not an option but a necessity for Türkiye, since more than half its exports go to Europe. The main challenge, he said, is producing energy that is both cheap and clean.

Şimşek said Türkiye imports more than 70% of its primary energy, which accounts for a large share of the current account deficit. Over the past 10 years, he said, the country has paid about $600 billion for imported oil and natural gas, more than its gross external debt.

Expanding renewable capacity is therefore clear-cut, he said, and will strengthen economic resilience. By decarbonizing the energy system while spreading electrification, Türkiye aims to cut its dependence on energy imports and its macrofinancial risks, he said. It also lets the country offer industry cheaper and more competitive energy, he noted, though many steps remain.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Ankara and Riyadh signed a pact ​Tuesday for the second phase of a deal ⁠struck in February to ⁠build large-scale power plants in Türkiye, the Turkish Energy and Natural Resources Ministry said.

Wind power ​plants are ⁠planned with a total capacity of 3,000 megawatts (MW), or the equivalent of a fifth of Türkiye’s existing installed wind power capacity, the ministry said.

President Recep Tayyip Erdoğan oversaw the signing of the deal by Energy and Natural Resources Minister Alparslan Bayraktar and Saudi Energy Minister Abdulaziz bin Salman Al Saud at the COP31 summit in Antalya.

“We are deepening our strategic ⁠energy ⁠cooperation with Saudi Arabia,” Bayraktar said, adding that the investments aimed to strengthen grid infrastructure and boost system flexibility.

“With the agreement signed today in Antalya, we are taking our efforts to implement the additional 3,000 megawatts of capacity planned for the second phase a step further,” he noted.

“In this context, we envisage developing wind power plants supported by high-voltage direct-current transmission infrastructure and battery energy storage systems,” he added.

The first phase of the February pact envisages ACWA Power building ⁠solar power plants with a combined installed capacity of 2,000 MW in Sivas and ​Karaman’s Taşeli region.

Bayraktar said he was pleased with progress on the first phase.

The agreements will ​bring to 5,000 MW the total capacity of power ⁠plants ‌to ‌be built jointly with ⁠Saudi Arabia.

Meeting ‌Türkiye’s long-term energy targets will need an average ​annual installation of ⁠10,000 MW of ⁠new wind and solar power capacity, ⁠government plans ​show.

Bayraktar said the investments would help expand Türkiye’s renewable energy capacity, strengthen its electricity grid and improve system flexibility while deepening energy ties with Saudi Arabia.

“We will continue turning confidence in Türkiye’s energy transition and investment environment into concrete projects,” he said.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.