Economists evaluated the CBRT’s 500 bps rate hike move in light of the recent wage and exchange rate-driven cost pressures and tax regulations:
Economist Mahfi Egilmez: “In principle, it is right to raise interest rates gradually in the transition from irrationality to rationality, but this decision should be supported by structural reforms to improve expectations…”
Economist Hayri Kozanoglu: “The CBRT was stuck between inflation and economic stagnation. With a 500-point hike, the CBRT made its choice in favor of economic stagnation. It is understood from the text that the 33% inflation target for 2024 in the Inflation Report due to November 2nd will be maintained. In particular, interest rates on credit cards and personal loans will hurt.”
Economist Mustafa Sonmez: “With their zigzags in foreign policy and their outward expressions of Hamas sympathies, they are making such guffes and these policy rate hikes won’t help with this foreign policy rhetoric. Would it help if they raised it by 10 points instead of 5? Would it lower the risk premium? I don’t think so…”
“They will stop at 35% and will watch”
Economist Guldem Atabay: “The right step from the Committee. What is not clear to me: There is a message that gradual rate hikes will continue when necessary. It is said that the effect of wage/tax increases is complete and that the pressures continue with expectations and services. I understand that it will stop at 35% and will watch. Although it has a path to 40-45%…”
