Economy
JPMorgan’s Dimon warns of oil shocks, sticky inflation, higher rates
The war in Iran risks oil and commodity price shocks that could keep inflation sticky and push interest rates higher than the market now expects, JPMorgan Chase CEO Jamie Dimon warned Monday.
The warning came in an annual letter to shareholders a day after U.S. President Donald Trump ratcheted up pressure on Iran, threatening to target its power plants and bridges Tuesday if it does not reopen the Strait of Hormuz, a key waterway.
Dimon, 70, who has run JPMorgan, the largest U.S. bank, for two decades, also said the private credit sector “probably” does not present a systemic risk, despite investors’ recent moves to pull back from such funds amid worries that advances in AI will hurt underlying borrowers.
“The challenges we all face are significant,” Dimon added, citing geopolitical risks such as the war in Ukraine, broader hostilities in the Middle East and tension with China.
“Now, because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect.”
Time will tell whether the Iran war achieves the United States’ objectives, Dimon said, adding that nuclear proliferation remains the greatest danger from Iran.
War-driven inflation worries have led markets to largely rule out interest rate cuts this year, after monetary easing fueled record equity highs last year.
Last week, the benchmark S&P 500 index closed its worst-performing quarter since 2022, weighed down since late February by the war and the resulting spurt in energy prices.
Dimon said the U.S. economy continued to be resilient, with consumers still earning and spending, though with some recent weakening, and businesses still healthy.
But he cautioned the economy had been fueled by large amounts of government deficit spending and past stimulus, while increased expenditure on infrastructure remained a growing need.
The fiscal stimulus from Trump’s “Big, Beautiful Bill,” deregulation policies and artificial intelligence-driven capital spending are other positives for the economy, Dimon said.
Private credit may not be systemic risk
Dimon said the $1.8 trillion private credit market is relatively small. But once the credit cycle weakens, he warned, losses on all leveraged lending will be higher than expected as credit standards have been weakening modestly across the board.
Private credit also does not tend to have great transparency or rigorous valuation loan “marks,” increasing the chance that investors will sell if they think the environment will worsen, he said.
Blue Owl last week told investors it was limiting withdrawals from two funds after a historic level of first-quarter redemption requests, with AI-related worries driving an investor exodus from its technology-focused fund.
Dimon also used the letter to sharply criticize revised capital rules proposed by U.S. bank regulators last month, decrying some aspects as still “nonsensical.”
JPMorgan was among the banks that fought hard to water down 2023 drafts of the so-called Basel III and GSIB, or Global Systemically Important Banks, surcharge rules.
But on Monday, Dimon said the proposals were still “very flawed,” adding that JPMorgan’s GSIB surcharge – an extra capital layer held by such banks – would only fall to 5%, a figure he said punished its success and was “absurd” and “un-American.”
Domestic markets in Türkiye have managed to maintain the positive momentum they built at the start of the year during the first quarter, with Turkish equities emerging among the best-performing global markets despite pressure from geopolitical tensions in the Middle East.
The BIST 30, which tracks the largest and most liquid companies on Borsa Istanbul Stock Exchange (BIST), rose 18.77% in the first quarter after ending 2025 at 12,223.61 points and climbing to 14,518.03 points by the end of March.
That performance placed the index among the world’s top 10 best-performing benchmark indices during the quarter.
In dollar terms, the BIST 30 also gained 14.7%, making it one of the strongest-performing stock indices globally at a time when many major markets in the United States, Europe and Asia posted declines.
The broader BIST 100 also advanced strongly, rising 13.6% in the first quarter to end March at 12,790.98 points, compared with 11,261.52 points at the end of last year.
The BIST 100 surged 22.9% in January alone, recording its strongest monthly performance since November 2022.
Foreign investor inflows and continued reserve accumulation by the Central Bank of the Republic of Türkiye (CBRT) helped push the BIST 100 to a record high of 14,532.67 points in February.
Investor sentiment was also supported by continued guidance from policymakers that the disinflation process would remain firmly in place.
Iran war weighs on global markets
The conflict in the Middle East, triggered by attacks by the United States and Israel on Iran and subsequent Iranian retaliation, created heavy selling pressure across global markets in March.
The rise in geopolitical risks is estimated to have wiped about $14 trillion from the value of global financial markets over the past month.
Concerns over disruption to the Strait of Hormuz, a key chokepoint for global energy supplies, pushed oil prices higher and altered inflation expectations as well as the outlook for central bank policy worldwide.
Markets grew increasingly concerned that major central banks, led by the U.S. Federal Reserve (Fed), could adopt a more hawkish stance in response to higher energy prices and inflationary pressures.
The stronger inflation outlook boosted the dollar against other currencies, while global bond markets also came under pressure.
The yield on the benchmark 10-year U.S. Treasury note climbed to 4.49%, its highest level since July 2025, while the dollar index remained firmly above 100.
CBRT acts to ease pressures
Against this backdrop, Türkiye’s economic management was seen as relatively resilient thanks to swift policy action and an ability to respond quickly to global volatility.
The CBRT introduced new measures aimed at improving Turkish lira liquidity conditions in the banking system.
The bank launched foreign exchange-backed lira swap transactions in order to provide banks with greater flexibility in managing lira liquidity.
The move is intended to limit volatility in both credit and interest rates, while also easing pressure on the lira.
Officials expect the measure to prevent a tightening in lira liquidity, support banks facing funding pressures and contribute to more balanced lending conditions.
The measure is also viewed as important for both supporting liquidity in the banking sector and strengthening foreign exchange reserves, as the central bank effectively injects lira liquidity by purchasing foreign currency from banks in exchange for lira.
Türkiye and Syria are set to hold a series of meetings this week aimed at deepening economic ties and paving the way for a new level in trade after Ankara added Syria to its target export markets list this year.
Trade between the two countries gained momentum after the ouster of longtime dictator Bashar Assad in late 2024, as the neighboring countries also seek broader cooperation in areas including industry, transportation and energy.
The pace has been accelerated alongside diplomatic contacts. This weekend, Foreign Minister Hakan Fidan visited Syria, where he met Syrian President Ahmed al-Sharaa.
The meetings focused on regional developments and security issues, as well as ways to strengthen bilateral ties and expand economic cooperation.
JETCO meeting, investment forum
The first meeting of the Türkiye-Syria Joint Economic and Trade Committee, or JETCO, is scheduled to take place on Tuesday.
The meeting is expected to be co-chaired by Trade Minister Ömer Bolat and Syrian Economy and Industry Minister Nidal al-Shaar.
A Türkiye-Syria Business and Investment Forum will also be held with the participation of business representatives from both countries.
The forum is expected to bring together companies from the energy, construction, health care, food, agriculture, livestock, logistics, education and textile sectors for bilateral meetings.
Panels on logistics, banking and contracting are also planned.
Exports rise sharply
The growing engagement is expected to strengthen cooperation across multiple sectors and open the way for new records in bilateral trade.
Syria was added to Türkiye’s list of target export markets this year.
Türkiye’s exports to Syria rose by nearly 60% in 2025 to $3.5 billion, up from $2.2 billion a year earlier.
The largest export category last year was milling products, malt, starches, inulin and wheat gluten, totaling $232.7 million.
Exports continued to accelerate following the collapse of the former regime.
In the first two months of this year, exports climbed a further 26.7% on an annual basis to more than $666.7 million.
That marked the highest January-February export figure to Syria since the Turkish Statistical Institute (TurkStat) began publishing the data in 2013.
Motor vehicles, tractors, bicycles, motorcycles and related parts and accessories ranked as the top export category in the first two months of the year, with shipments totaling $72.7 million.
Turkish authorities are rolling out a credit volume of TL 120 billion (around $2.7 billion) to shield its tourism and exports sectors amid global tensions, according to a report on Saturday.
The Treasury and Finance Ministry is introducing this volume under the credit guarantee system for sectors engaged in tourism and exports to minimize the impact of geopolitical and regional developments, a report by Anadolu Agency (AA) said.
The ministry is implementing the credit guarantee system in line with the financial stability objectives of its economic program, according to information obtained by AA.
While working on a new package and the limit updates related to the credit guarantee system, the ministry aims to ensure uninterrupted access to financing for the real sector.
Now, the ministry will take another strategic step under the Treasury-backed guarantee system to minimize the effects of the global outlook and regional risks on economic activity.
Within the framework of the investment, employment, and export-oriented growth strategy outlined in the economic program, the ministry will inject an additional TL 120 billion in credit into the economy.
This step will be taken to update the packages of the Export Development Inc. (IGE) and Participation Finance Guarantee Inc. (KFK), whose limits have been reached due to strong demand.
Thus, the aim is to take precautions against the potential indirect effects of geopolitical tensions in the region on tourism, Türkiye’s most important foreign currency-earning service sector.
Through the Tourism Support Package, a credit facility of TL 60 billion has been created to help tourism businesses maintain operational efficiency. This resource is intended to help the sector withstand pressure from regional volatility in advance.
Under the Export Breakthrough Support Package, a credit facility of TL 30 billion has been allocated for exporters via IGE. An additional TL 12 billion will be made available to exporters through KFK.
Moreover, an additional limit of TL 18 billion has been defined for the existing support package carried out through KFK. With this limit, it is envisaged that businesses will gain fast and cost-effective access to the working capital they need in the face of rising costs.
Treasury and Finance Minister Mehmet Şimşek stated that these packages were designed in full coordination with the disinflation process and the selective credit policy.
“The additional volume will be directed toward ‘targeted’ areas that directly enhance production, foreign currency-earning activities, and economic resilience,” he said.
“To limit potential deterioration in the external balance due to geopolitical developments, we are providing strong support to tourism, the leading sector in service exports. With these packages, we aim to prevent possible tightening in access to financing and to preserve the working capital cycle of the real sector,” he added.
“In this way, while strengthening the financial resilience of the real sector, we also ensure the sustainability of growth without compromising macroeconomic stability targets.”
“Our efforts to limit the potential impact of the war in our region on our current account balance will continue,” Vice President Cevdet Yılmaz separately said in a social media post.
Investor-directed measures
Also, a report on Sunday suggested that Ankara has begun work to provide incentives and attract foreign capital amid ongoing regional crisis.
Among measures reported by AA, Türkiye is said to be working to reduce the corporate tax rate, especially for manufacturers and exporters, while also the introduction of a special taxation regime that encourages foreign individuals to come to Türkiye is reportedly on the agenda.
Moreover, studies are being carried out extensively on the advantages to be provided to qualified investors who will choose Türkiye.
The relevant ministries are also expected to carry out studies on residence permits, work permits and digital visas in order to facilitate the arrival of these investors to the country, it added.
The Middle East war “presents a serious risk to Africa,” the African Union (AU) and the African Development Bank (AfDB) cautioned in a report seen by Agence France-Presse (AFP) on Saturday.
The conflict threatens to increase the cost of living and curtail growth on the continent, the report warned.
The Middle East accounts for 15.8% of Africa’s imports and 10.9% of its exports, the report noted.
“The conflict, which already has triggered a trade shock, could quickly turn into a cost-of-living crisis across Africa through higher fuel and food prices, rising shipping and insurance costs, exchange rate pressures, and tighter fiscal conditions,” it added.
The growth rate of most African countries continues to be slower than before the COVID-19 pandemic, it noted.
“A loss in output growth of 0.2 percentage points on Africa’s GDP is projected for 2026 if it (the conflict) exceeds six months,” it said.
“The longer the conflict lasts and the more severe the disruption to shipping routes and energy and fertilizer supplies, the greater the risk of a significant growth slowdown across the continent.”
Reduced deliveries of liquefied natural gas (LNG) from the Gulf will impact fertilizer production, limiting its availability during the crucial planting period up to May, it added.
Currencies hit
The report was compiled by the U.N. Development Programme (UNDP) and the United Nations Economic Commission for Africa (UNECA).
According to recent data from the AfDB, the currencies of 29 African countries have already depreciated, increasing the cost of servicing external debt, making imports more expensive and reducing foreign exchange reserves,
Some countries could see some short-term gains, such as Nigeria for its oil exports or Mozambique for its LNG.
Also, the rerouting of ships around Cape of Good Hope could benefit ports in Mozambique, South Africa, Namibia and Mauritius.
Kenya is establishing itself as a logistics hub in East Africa, while Ethiopian Airlines, the leading carrier in Africa, is serving as an “emergency air bridge” between the continent, Asia, and Europe, the report noted.
But these gains are likely to be uneven and will not offset the consequences for inflation, budgets, and food security in Africa, they warned.
Above all, the current crisis could hit the costs of humanitarian aid and divert donor funds toward other priorities.
Turkish authorities denied on Sunday allegations related to recent briefings with investors in London, also rebuffing claims that assessments tied to interest rates were made.
The Turkish central bank said in a written statement that claims that previously undisclosed information and assessments were shared with investors during technical briefings in London were “completely unfounded.”
“The Central Bank of the Republic of Türkiye (CBRT) conducts its communication policy based on the principles of transparency, consistency, and real-time disclosure. Accordingly, the CBRT regularly hosts comprehensive briefings with both domestic and international market participants,” the bank said.
Reuters reported on Friday that three people who took part in the briefings were left with the impression that an interest rate hike was an option as Turkish authorities seek to address the economic effects stemming from the Iran war.
The central bank said Sunday its briefings “were strictly limited to publicly available monetary policy texts and published macroeconomic data.”
“The CBRT does not, under any circumstances, disclose non-public information or policy assessments to any external parties, whether domestically or internationally,” the bank said in a statement.
It added that such briefings address technical questions on the broader macroeconomic outlook, financial markets, and the banking sector, aimed at fostering a clear understanding of monetary policy implementation.
In a separate statement, the Treasury and Finance Ministry said that Treasury and Finance Minister Mehmet Şimşek never comments on interest rate policy at any domestic or foreign meetings as a matter of principle.
The private meetings with dozens of foreign investors were held last week after a series of policy steps taken by authorities, including a measure to limit fuel price increases since the start of the U.S.-Israel-Iran war in order to keep disinflation on track.
Turkish annual inflation slowed to 30.87% in March from 31.53% in February, official data showed on Friday.
Türkiye’s inflation rate cooled at a faster pace than analysts anticipated both on an annual and a monthly basis in March despite pricing pressures amid the Iran war, official figures showed on Friday.
Annual inflation dipped to 30.9%, compared to 31.5% in February, according to the Turkish Statistical Institute (TurkStat).
Energy prices have been soaring after the U.S.-Israel attacks on Iran unleashed a conflict that has run for more than a month and effectively closed the Strait of Hormuz, through which a fifth of global oil and liquefied natural gas is shipped.
That came as a test for the world economies, including Türkiye, where authorities have acted to limit the pass-through of volatile energy costs to domestic prices.
On a monthly basis, consumer prices rose 1.9%, compared with 2.96% in February, the TurkStat data showed.
Surveys had forecast monthly inflation to be 2.32%, with the annual rate seen at 31.4%, driven by a rise in fuel prices and weather-related pressures on food inflation.
Friday’s data showed the biggest annual price increases were in education, at 51.97%, housing, at 42.06%, and transport, at 34.35%.
Food inflation improving
Food inflation eased by 4.8 percentage points compared with the same month last year to an annual rate of 32.4%.
Treasury and Finance Minister Mehmet Şimşek said improving climate conditions following last year’s frost and drought are expected to support the food inflation outlook in 2026.
Disinflation in services, Şimşek said, is likely to become more visible thanks to declining rent inflation, government policies aimed at increasing housing supply and rule-based pricing in education.
Annual services inflation has fallen by 16.1 percentage points over the past year, he said.
The data showed the smallest increases in March were recorded in clothing and footwear, at 7.2%, furnishings and household equipment, at 20.2%, and information and communication, at 24.12%.
The food group was the key driver for the positive surprise in the headline rate, though pricing pressures in the energy group have increased with the geopolitical shock, as expected, said analysts at the Dutch financial giant ING.
The data showed transport and food prices were the biggest monthly drivers of inflation in March.
Vice President Cevdet Yılmaz linked transport cost increase to higher energy prices due to the Iran war, which he said created upward risks for the global inflation outlook.
Separate data on Friday also showed the domestic producer index rose 2.30% month-over-month in March for an annual increase of 28.08%.
Central Bank of the Republic of Türkiye (CBRT) raised its year‑end inflation forecast range by two percentage points to 15%-21%, while keeping its interim 16% target unchanged in February.
CBRT Governor Faith Karahan said earlier this week that the bank would maintain the needed tight policy to continue disinflation.
The bank has halted its easing cycle with the main rate at 37%, lifted its overnight rate by about 300 basis points to near 40%, and undertaken heavy sales and swaps of foreign exchange and gold reserves to support the Turkish lira.
Karahan defended the moves as a “natural choice” amid such market turmoil.
Fiscal room used to limit shocks
A slide presentation that Şimşek made to investors in London, published on Wednesday, said short-term war effects were negative but manageable.
On Friday, he said the government had taken the necessary steps to limit the economic impact of the conflict.
He said the fiscal room created during the government’s medium-term program period has enabled authorities to quickly and effectively reintroduce measures such as the fuel price adjustment mechanism to ease inflationary pressures.
The “sliding-scale” system, launched last month, adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers. Yılmaz said a significant portion of fuel price increases is being absorbed through the budget.
The mechanism has absorbed roughly two-thirds of the oil price shock and reduced the impact on the monthly figure, analysts at ING said.
While short-term geopolitical shocks may have some impact on inflation, Şimşek said, “We continue to implement our holistic and decisive policy set that will ensure we reach our goal of permanent price stability.”
Yılmaz said authorities would continue to offset the direct and indirect impact of geopolitical developments through coordinated monetary, fiscal and income policies, while supporting disinflation with supply-side measures in social housing, food supply, logistics and renewable energy.
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