Economy
Fed holds rates steady as US inflation stays elevated
The U.S. Federal Reserve left its benchmark interest rate unchanged at 3.5%-3.75% on Wednesday, saying economic activity continues to expand at a solid pace despite uncertainty linked to tensions in the Middle East, while inflation remains above policymakers’ target.
The Federal Open Market Committee (FOMC) decided by a unanimous 12-0 vote to maintain the target range for the federal funds rate between 3.5% and 3.75%, in support of the Fed’s dual mandate.
The decision marked Kevin Warsh’s first FOMC meeting as Fed chair, with investors closely watching how he will handle persistent inflation, Middle East-related uncertainty and questions about the central bank’s forward guidance.
The federal funds rate has remained in the current range since the Fed cut rates by 75 basis points in the second half of 2025.
The latest policy statement was significantly shorter than the previous and removed wording that had been interpreted as signaling a bias toward possible rate cuts. The move suggested policymakers are seeking to keep their options open as they assess whether the latest inflation surge will prove temporary or persistent.
Nearly half of Federal Reserve policymakers have lost faith that merely holding borrowing costs steady will be enough to bring inflation back down to their 2% target in the face of the oil price surge after the Iran war.
Nine of the U.S. central bank’s 19 policymakers now believe they will need to raise the Fed’s policy rate this year, according to projections published on Wednesday as the Fed announced its decision to leave the policy rate in its current 3.50%-3.75% range. None had that view just three months ago, when the Fed last published its projections.
Six of those nine, or nearly a third of the committee, feel more than one quarter-point rate hike will be needed this year, the projections show.
Eight believe that rates ought to stay unchanged, and just one felt a single rate cut would be in order. One policymaker, not named, did not submit a rate-path view.
Those views, captured in the Fed’s so-called dot plot of individual policymaker’s rate-path views, illustrate how quickly the debate within the central bank has flipped from a focus on how long to hold rates steady before cutting them, to a growing worry – and for a some, a conviction – that the Fed will need to raise rates to keep price pressures from higher fuel prices from seeping more broadly into underlying inflation.
They also pose a challenge for new Fed Chairman Kevin Warsh, who was picked for the job by President Donald Trump with the expectation that he cut interest rates, an option that becomes less feasible as broad support for such a move fades.
Global oil prices have dropped sharply since last week when Iran and the U.S. announced a deal to end the conflict and get oil flowing through the Strait of Hormuz again. But it is not clear how quickly shipping and exports could recover after the agreement is signed, particularly given the damage that energy facilities sustained during the three-month war.
Fed policymakers typically have the option of rewriting their dot-plot submissions until shortly before publication, so the views should reflect the latest developments in the Middle East.
Inflation has been running above the Fed’s 2% target for more than five years.
The projections published on Wednesday show central bankers have become more pessimistic about inflation since March, reflecting the sharp rise in inflation since the start of the war. Inflation by the personal consumption expenditures price index is now seen at 3.6% by the end of the year, based on the median policymaker view. In March policymakers expected year-end PCE inflation of 2.7%. Core PCE inflation, which strips out volatile oil and food prices, is now seen hitting 3.3%, compared with 2.7% previously. The unemployment rate is now projected at 4.3% by year-end, matching the actual reading in May and lower than the 4.4% policymakers had expected in March. The forecast suggests increasing confidence that the labor market is not weakening or in need of support from rate cuts, as some policymakers had worried earlier this year. GDP growth is seen at 2.2% this year, worse than the 2.4% forecast as of March. (Reporting by Ann Saphir; Editing by Andrea Ricci)
The World Bank has approved 400 million euros (nearly $464 million) in additional financing to help expand Türkiye’s renewable energy market, focusing on wind power and utility-scale battery energy storage projects.
The financing expands the Accelerating the Market Transition for Distributed Energy Program, building on the success of its first phase, approved in 2024, which helped accelerate the deployment of low-voltage distributed solar energy systems across the country.
The new package consists of two 200 million euros International Bank for Reconstruction and Development (IBRD) loans provided to the Development and Investment Bank of Türkiye (TKYB) and the Industrial Development Bank of Türkiye (TSKB) under a results-based financing framework, in which disbursements are tied to independently verified performance targets.
With the additional funding, the program’s scope will be broadened beyond distributed solar projects to include onshore wind developments and next-generation Battery Energy Storage Systems (BESS).
Türkiye aims to reach 120 gigawatts of combined wind and solar capacity by 2035, alongside a significant expansion of battery storage capacity.
However, access to long-term financing for distributed wind and storage projects remains limited, partly due to local banks’ short-term funding structures, the World Bank said on Monday.
The program aims to address these financing constraints by providing longer-term funding through development banks, strengthening market expertise in emerging grid technologies and mobilizing private sector investment.
“Scaling up battery storage and distributed wind is the next critical step to future-proof Türkiye’s energy grid,” said Humberto Lopez, World Bank country director for Türkiye.
“By using public development banks to bridge the commercial financing gap, this program enables ready-to-build projects to reach financial close, which will support the competitiveness of Turkish industries, enhance national energy security, and create local jobs across the renewable energy value chain,” Lopez added.
According to the World Bank, the expanded program is expected to support 1,579 megawatts of additional renewable energy capacity, 392 megawatt-hours of battery storage and mobilize up to $405 million in private financing.
The Türkiye package forms part of a proposed $2.96 billion increase in the World Bank’s regional renewable energy financing framework, designed to accelerate clean energy investments across Europe and Central Asia.
“Türkiye is acting as a trailblazer for the broader ECARES (Europe and Central Asia Renewable Energy Scale-Up) program,” said Charles Cormier, World Bank regional director for infrastructure for Europe and Central Asia.
“By successfully pioneering commercial rooftop and utility-scale solar, onshore wind and battery storage, Türkiye is establishing the best practices and knowledge that can be replicated to modernize grid infrastructure, integrate renewables and enhance energy security across the entire region,” Cormier added.
A U.S. federal judge on Wednesday ordered the dismissal of a long-running case against Halkbank over alleged Iran sanction violations after the Turkish public lender completed a compliance review.
The bank’s shares on the Borsa Istanbul Stok Exchange (BIST) rose as much as 8.4% after U.S. District Judge Richard Berman signed a “nolle prosequi” order requested by U.S. Attorney Jay Clayton seeking to drop the case.
“The criminal case against our bank ongoing in the United States for years has been definitively and conclusively closed,” Halkbank said in a statement.
Halkbank CEO Recep Süleyman Özdil said the lender expected its opportunities to access foreign funding would improve.
The dismissal promised to relieve one of the main irritants between Türkiye and the U.S., as the NATO allies experience their best ties in decades.
Halkbank was charged in 2019 during President Donald Trump’s first term with allegedly helping Iran evade American economic sanctions. The bank had pleaded not guilty in the case.
President Recep Tayyip Erdoğan repeatedly rejected the charges, insisting that Ankara did not violate the U.S. embargo on Iran. Erdoğan once called the case unlawful and “ugly.”
After Erdoğan and Trump met last year, the Turkish president expressed hope for a resolution of the matter.
Erdoğan said in October that Trump told him during the September meeting at the White House and in a subsequent phone call that the “Halkbank problem is finished for us.”
This March, the U.S. Department of Justice announced a deferred prosecution agreement in which it would dismiss the case following a successful compliance review of Halkbank’s programs.
No money changes hands under the deal, and the bank did not admit criminal wrongdoing.
To fulfill the agreement’s requirements, Halkbank enlisted a Turkish affiliate of accounting firm Ernst & Young to review the bank’s compliance program and check whether any transactions were for the benefit of Iran or Iranian persons or entities.
In a June 10 joint request to judge Berman co-signed by Halkbank counsel, attorney Clayton said the bank’s compliance obligation “has been satisfied,” according to a 12-page letter.
The review identified “no findings of noncompliance,” the letter said.
Energy and Natural Resources Minister Alparslan Bayraktar visited Romania on Wednesday to inspect a nuclear power plant using Canada’s CANDU reactor technology as Türkiye evaluates options for its planned third nuclear power station.
According to a statement from the Energy Ministry, Bayraktar toured Romania’s Cernavoda Nuclear Power Plant, which operates two CANDU reactors developed by Canadian engineering firm AtkinsRealis.
Türkiye is seeking to expand its nuclear power capacity beyond the four-reactor Akkuyu plant, which is being built by Russia’s state-owned nuclear company Rosatom in the southern Mersin province and is expected to begin generating electricity later this year.
Ankara plans to construct two additional large-scale nuclear power plants, one in Sinop on the Black Sea coast and in the Thrace region, with negotiations continuing with South Korea for a second facility and discussions with Canada accelerating in recent months for a third project.
“A critical process is underway for Türkiye,” Bayraktar said during the visit.
“Following Akkuyu, we are evaluating technology choices, potential partnerships and the countries we will work with on future nuclear projects,” he added.
Türkiye aims to reach 7.2 gigawatts (GW) of nuclear generation capacity by 2035 and 20 GW by 2050. It plans to complement the conventional nuclear plants with small modular reactors (SMRs).
Akkuyu’s four reactors will have a combined installed capacity of 4,800 megawatts (MW).
Once all units are operational, it is expected to supply from 10% to 15% of Türkiye’s electricity demand.
In addition to cost and electricity pricing, Ankara is placing increasing emphasis on localization requirements in ongoing negotiations, seeking to ensure that a significant share of equipment and components can be manufactured domestically and integrated into the global nuclear supply chain.
Bayraktar said AtkinsRealis is expected to meet Turkish suppliers and equipment manufacturers later this month or in early July.
“We want a nuclear power plant that is competitive, more affordable, highly secure and has a high degree of localization,” he said.
Türkiye has also been engaged in long-running discussions with China over nuclear cooperation and has intensified contacts with South Korea in recent months.
Bayraktar said the visit to Romania provided an opportunity to examine operational examples of CANDU technology in a nearby country with which Türkiye maintains close relations.
Türkiye views nuclear energy as a key component of its strategy to strengthen energy security and achieve its target of net-zero emissions by 2053.
“Türkiye wants access to nuclear power at competitive prices while ensuring the highest safety standards,” Bayraktar said.
“We will move forward with future projects through a more comprehensive approach that also addresses nuclear waste management and fuel supply security.”
Italy’s government has issued approval to the joint venture between state-controlled defense group Leonardo and Türkiye’s powerhouse Baykar to produce unmanned aerial vehicles (UAVs), a report said Wednesday.
The deal, first announced in March 2025 and structured as a 50-50 partnership, aims to address Europe’s weakness in the drone industry, with the two groups seeing a UAV market worth some $100 billion over the next 10 years.
The government cleared the partnership at a Cabinet meeting on Tuesday, Reuters reported, citing a source.
Under one of the approval’s conditions, sales of the drones and any further international development of the joint venture will be limited to countries politically aligned with Europe and NATO.
All technology used in the drones will be classified, the report said.
Italy exercised its so-called “golden power” rules, aimed at protecting strategic national interests in mergers and acquisitions, which allow the government to impose conditions or even block deals.
The agreement with Leonardo allows Baykar, one of the world’s largest drone exporters, to access the European market and opens the way for expanded industrial activities in Italy.
The government approval of the joint venture was first reported by Italian daily Il Messaggero.
Baykar has meanwhile acquired Italian aviation and defense company Piaggio Aerospace in late 2024.
The Istanbul-based company has become one of the most prolific drone exporters after having gained prominence through their use in multiple conflicts.
It produces light and heavy drones, as well as developing autonomous jet-engine-powered ones, and is betting on autonomous air-to-air combat drones taking over the role of fighter jets.
The oil market is expected to enter a substantial supply surplus in 2027 after rebounding from the closure of the Strait of Hormuz, the International Energy Agency (IEA) said in its monthly report Wednesday.
The U.S. has announced an interim agreement to end the Iran war, which includes Iran reopening the key waterway and the U.S. lifting its naval blockade of Iran, potentially bringing an end to the largest oil supply disruption in history.
The war is estimated to have blocked more than 14 million barrels per day (bpd) of Middle East oil output according to the IEA.
“If the deal holds, exports and production from the Gulf should see a gradual recovery – not least because Iranian oil exports can fully resume once the U.S. blockade is lifted,” the agency, which advises industrialized countries, said.
The oil market will then fall into a significant supply overhang next year, the IEA said in its first look at 2027, as oil supply is set to surge by 8 million bpd while demand rises by just 2 million bpd.
Middle East supply already rising
Flows through the strait were already rising by early June because of a pick-up in ship-to-ship transfers in the Gulf of Oman, the IEA said, helping to boost total Middle East flows to around 12 million bpd in early June from a May low of 9.6 million bpd.
However, political and operational constraints, including prolonged demining and unresolved transit arrangements, leave downside risks to the Middle East recovery outlook, the IEA said.
Overall, the IEA forecasts oil supply to fall by 3.9 million bpd in 2026, as production losses in the Middle East outpace rising output from the Americas.
Russian crude oil and refined fuel exports were stable at around 7.4 million bpd in May despite continued Ukrainian drone attacks on refineries, the IEA said, though the attacks forced Russia to prioritize fuel supply to the domestic market and to maximize crude oil exports.
Demand destruction spreads
Global oil demand will fall by 1.1 million bpd this year according to the IEA, after a 5 million bpd April-June drop.
Demand destruction has spread beyond the areas that were initially most impacted by the Iran war, the IEA said, with deliveries of all major fuels and especially gasoil “showing signs of strain across almost all regions.”
Demand will then recover swiftly and grow next year, as falling oil prices and an improving economic outlook drive the rebound, the IEA said.
In its own monthly report, rival forecaster OPEC lowered its forecast for oil demand growth in 2026 to 970,000 barrels per day.
Large surplus looms in 2027
The IEA forecasts imply that supply will come in around 920,000 bpd below total demand in 2026, according to Reuters’ calculations, narrowing from a 1.78 million bpd deficit in the previous month’s report.
The IEA’s 2027 forecasts imply that supply will outweigh demand by 5.05 million bpd next year, as demand growth is overshadowed by supply ramping up as Middle East barrels return.
The global oil market tipping into a large surplus in 2027 could “provide a welcome respite to the market and an opportunity to replenish depleted inventories, or to build new strategic reserves, as countries review their energy strategies and policies in response to the crisis,” the IEA said.
However, oil inventories could plunge further to historic lows before the market balance is able to shift to a surplus towards the end of this year, the IEA said.
Inventories have fallen at a rate of 3.8 million bpd since the start of the war on Feb. 28, with stock draws in May alone at around 4.6 million bpd, according to preliminary IEA data.
Turkish discount grocery chain BIM has received approval from the country’s banking regulator to establish a participation bank, it said in a public statement on Wednesday.
The new bank, named Dost Katılım Bankası, will have a founding capital of TL 10 billion (nearly $216 million), it said.
In the statement shared at the Public Disclosure Platform (KAP), BIM recalled that it had announced earlier in December last year that it had submitted an application to the Banking Regulation and Supervision Agency (BDDK) for establishing the bank.
The said decision was also published in the Official Gazette, it added.
Starting operations in 1995 with 21 stores, BIM continued its steady growth trajectory in 2025, according to the company.
By opening 662 new stores domestically during the year, the company reached a total of 12,751 stores in Türkiye as of the end of 2025.
Minister Göktaş: We have identified 30 thousand 296 vulnerable households so far.
Global Sumud Flotilla organizer says Turks are backbone of mission
Praise for Türkiye from the Japanese minister: The attention-grabbing emphasis on ‘National defense industry’!
Minister Göktaş: We have identified 30 thousand 296 vulnerable households so far.
Global Sumud Flotilla organizer says Turks are backbone of mission
Praise for Türkiye from the Japanese minister: The attention-grabbing emphasis on ‘National defense industry’!
-
Daily Agenda3 days agoBREAKING NEWS I President Erdoğan’s call for peace and stability: “We will continue to contribute to permanent solutions”
-
Sports2 days agoBelgium salvages draw against Egypt after Lukaku’s introduction
-
Economy2 days agoLibya inks production-sharing deals with Türkiye’s TPAO, foreign firms
-
Economy2 days agoTürkiye registers $6.4B budget deficit in May
-
Daily Agenda5 hours agoLast minute | The Halkbank case that had been going on for 9 years in the USA was dropped! “We will continue to contribute to the growth of the country’s economy”
-
Economy2 days ago‘EU can suspend Israel trade deal over international law violations’
-
Economy2 days agoFox to acquire streaming platform Roku in $22B deal
-
Daily Agenda3 days agoBREAKING NEWS I Peace message from Minister Fidan: “We welcome the agreement between the USA and Iran”