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In Our Chief Economist

Fixed income, Fed, and CBRT

THE SPREAD BETWEEN US 2-year and 10-year notes was 0.37 exactly a year ago. Now it stands at 1.47. This kind of normalization entails a strong expectation of genuine recovery, especially after the Biden bill passed. It also underlines a reflation scenario. With fiscal packages amounting to USD 5tn, nearing a quarter of the U.S....

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In Our Chief Economist

What may happen this year?

I HAVE SINGLED out two scenarios. They pertain to both global and local dynamics, which are intertwined in the days of COVID. The first encompasses a rapid amelioration of economic conditions due to the positive impact of vaccines. The second is based on a more pessimistic view that claims the outbreak won’t be easily contained...

Article
In Eco Analysis

2020 is over in terms of inflation, but its effects remain

THERE is a correlation, albeit not one-toone, between currency increases and price increases, particularly in producer prices. The change in producer prices is also reflected in consumer prices after a while, on a moderate scale. It should be underlined that the reflection from producer prices to consumer prices is limited due to the “structure of...

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In Our Chief Economist

2021: A brave new world?

WELL, that is the end, folks! We have finally come to the anti-climax and first, all positive expectations, and then all the calamity forecasts are borne out by events; they have become realities. The new era is not only characterized by lower interest rates, but also by lower growth throughout the global economy. It is...

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In Our Chief Economist

Endogeneity of the money supply and credit

IT IS TIME to offer a few guesstimates on what 2021 may bring. My focus is on the Turkish economy and finances. First, a very quick reminder of what has happened over the last three years. I am concentrating on monetary policy only, not on structural weaknesses and such. I emphasize endogenous money, and don’t...

Article
In Eco Analysis

Interest rate up, sales down!

HOUSE sales and secondhand transfers have decreased to levels that are considered normal. We neither see the lows we saw in April and May nor the highs due to advantageous loans. The interest rate on housing loans increased by nearly 2 points in the first week of December compared to the November average. That’s why...

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In Our Chief Economist

Bringing back economic serenity

Finally, the Central Bank has come to the rescue. True, there is a shortage of funds to rekindle investments. Again, it is no secret that net reserves are about minus USD 45bn. Also, it would take more than one step to convince households – let alone high net worth individuals, who would obviously behave defensively...

Article
In Our Chief Economist

Populism and Unreason

LET US PUT things in a historical balance sheet. In 1979, when the world was hit by the second oil shock, pent up inflation was unleashed and reached double digits. Jimmy Carter appointed Paul Volcker to the Fed and Volcker immediately hiked the interest rate and curbed all monetary aggregates, M1, M2 and M3. By...

Article
In Eco Analysis

Industrial production rose and fell in July

I F YOU think there’s a contradiction in the headline, you are right, but only at first glance. In fact, there’s nothing wrong with the title because industrial production both increased and decreased in July compared to the same period of the previous year. But how is this possible? Once again we face a dilemma:...

Article
In Our Chief Economist

From here to there

ACTUALLY, the unforgettable classic movie’s name was ‘From here to eternity’, but we can’t reach that far amid incredibly noisy signaling and suchlike. Not only is the surrounding politico-economic space at large noisy, i.e. Eastern Mediterranean, Libya, Greece, U.S. elections, etc., but also the monetary policy space itself is – or was – so until...

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