How to read 14%?


Central Bank kept the policy rate steady at 14%. The interest rate will be THE implemented at this level for six months as it won’t be changed until the June meeting.

Apparently, 14% has a charm!

19% and 14%…

19% was implemented for a long time last year. Now 14% has been a steady rate. Implementing the same rate for a long time could be considered a form of stability. Inflation and foreign exchange (FX) rates don’t abide by the interest rate. What a pity!

Although keeping the CB’s interest rate steady was the preponderant possibility, there were thoughts if there could be an increase. But the choice was used in favor of not changing the rate.

The election calendar seems to underlie the decision to keep the policy rate steady. We continue to advocate our opinion. Here is what we said previously:

– There are a few steps that could be taken to prevent FX rate hike and this hike to further raise inflation. These would save time and the election won’t be needed to be moved to an earlier time. These steps can/could be the interest rate hike or the introduction of inflation-indexed debt securities. The first one wasn’t done. Perhaps, the second option will come next.

– Election will be held as soon as possible in autumn before the economic situation further deteriorates if the interest rate isn’t increased, and no inflation-indexed debt securities are introduced.

Now, the following will probably be done: The course of FX rates will be tracked and the decision whether to issue inflation-indexed debt securities or not will be taken. The CB’s policy rate decision showed that the interest rate won’t be touched anymore no matter how it damages the economy. Other formulas will be tested, and other inventions will be created. Apparently, here is the goal:

Let’s hope we can manage until the election.

The CB says on the top of its official website that the primary objective of the Bank is to achieve and maintain price stability.

– As your goal is to achieve and maintain price stability, can you actually do it? – If you can’t and don’t, who has made the mistake? Has the driver of the bus passing in front of the Presidential complex in Ankara made it (for now)?

– Don’t you have any responsibility for what has happened to date? Don’t you feel under the water?

– Have you ever thought that you couldn’t fulfill the necessity of what you stated on your website?

– Do you ever think of why your name is the Central Bank of the Republic of Turkey instead of the Central Bank of the Turkish Republic? Don’t you feel uncomfortable as you don’t act in line with the necessity of this detail?

– You said in the PPK statement that the interest rate won’t remain below inflation, then you said the interest rate won’t remain below core inflation. Don’t you see keeping the interest rate at 14% has caused official inflation to reach 70%?

– Do you ever think to give up on the PPK statements that say the annual inflation target as 5%, which is even low for the monthly figures?

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