What matters on Monday, March 14

Ukraine is working with Israel and Turkey as mediators to finalize a location and framework for peace negotiations with Russia, according to Reuters. “When it is worked out, there will be a meeting. I think it won’t take long for us to get there,” Ukrainian presidential adviser and negotiator Mykhailo Podolyak said on national television.

Kremlin spokesman Dmitry Peskov said the fourth round of peace talks between the Russian and Ukrainian delegations will be held today.

President Recep Tayyip Erdogan received Greek Prime Minister Kyriakos Mitsotakis to discuss bilateral relations and regional and global developments including the latest geopolitical issues and repercussions of the Russian attack on Ukraine, according to the Communications Directorate. The meeting also focused on the mutual and regional benefits of increasing cooperation between the two countries. The two leaders also agreed to improve bilateral relations and to keep communication channels open, despite disagreements between the countries. The steps to be taken to reach the USD 10bn bilateral trade volume were also discussed in the meeting.

The legislative proposal on the Deputy Election Law and Amendment of Some Laws, which the AK Party and the Nationalist Movement Party (MHP) have been working on for a long time, will be submitted to the Parliament today. The proposal also includes a decrease in the election threshold.

As part of the goal to reach USD 100bn trade volume between Turkey and the U.S., the Commercial Diplomacy Events will be held by the Directorate of Communications in coordination with the Turkish Exporters Assembly (TIM).  A delegation of senior officials, Parliament members, and businesspeople from Turkey will visit the U.S. on March 14-18 to hold various meetings. The delegation will hold talks to discuss commercial diplomacy and bilateral economic relations in Washington and New York.

Apart from the Russia-Ukraine conflict, there are two factors that we expected to determine the course of the economy in March: the Fed’s (Federal Reserve) interest rate decision, and the interest rate decision of the Monetary Policy Committee (PPK).

The PPK will decide at its meeting this week whether to continue with the current policy rate or not. We do not know whether the Central Bank, which lowered the policy rate below the inflation rate in September, a breach of known economic rules, would have made such a decision if it knew it would lead to today’s results. We are facing a Consumer Price Index increase of around 55% against the current 14% policy rate, meaning that the real interest rate is around -40. Moreover, inflation will certainly increase even more in the next few months.

From this perspective, we should have said, “There will be a clear and strong interest rate increase from the PPK.” But we haven’t been able to form such sentences for six months. Still, we can say that we have never been this close to a rate hike in the last six months. The war, the rising current account deficit, the resumption of the foreign exchange rate, the sharp rise in Credit Default Swap (CDS) premiums, and the interest rate hike moves by the Fed inevitably strengthen this expectation. Therefore, the members at the PPK meeting need to ask each other the following question: “Is this your final answer?”

DAILY AGENDA

President Recep Tayyip Erdogan will receive German Chancellor Olaf Scholz (4:15 p.m.). A joint press conference will be organized following the meeting (6:00 p.m.).

IN OUR MAGAZINE THIS WEEK

>> On the cover: Hero Baby Turkey Marketing Director Sirin Isik is on our cover this week. The Swiss international consumer food manufacturer Hero Group’s Turkey operation Hero Turkey is celebrating its 20th year in the market with a sustainability report shared with employees and shareholders to present the company’s approach and performance in transparency and sustainability in line with United Nations Sustainable Development Goals. Developing its products inspired by the power of nature, Hero Turkey attaches importance to implementing different projects to ensure the sustainability of natural life, according to Sirin Isik, Hero Baby Turkey Marketing Director. You can read the details on pages 8-9.

>> Professor Ilter Turan: A big step in normalizing regional relations. P. 10.

>> Q&A: Dr. Nureddin Nebati, Minister of Treasury and Finance. P. 11.

>> Chief Economist Gunduz Findikcioglu: Energy Blues. You can read the details on pages 12-13.

>> Our Foreign Policy Columnist Zeynep Gurcanli examines the ‘Mobilization in Syria’ on page 14.

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