✔ With the reduction of the Central Bank interest rate by 1 more point…
– The fight against inflation is no longer a second plan, it is not clear.
– The exchange rate will rise, it has already risen, which will increase inflation.
– Imported inflation will increase, and the cheapening of fuel will come to an end.
– KKM’s load will increase even more.
The Central Bank’s policy rate was lowered for the first time this year, from 14 percent to 13 percent. Inflation is around 80%, interest is 13%. “Inflation is the rate of the period that is left behind, interest is the rate of the period ahead, so let’s make the comparison with the expected inflation” If we say, it doesn’t happen again, it doesn’t happen again.
In fact, this thought never leaves one’s mind. If you lower the interest rate economy it’s getting straight, especially inflation is going down, why don’t we bring that rate down even more. A symbolic rate may remain, which is 1 percent. Why don’t we download it there?
Let’s briefly remind the course of the following interest rate:
The interest rate, which was increased to 19 percent in March last year, was kept constant for the following five months. Starting in September, it decreased to 14 percent in December with a total reduction of 5 points for four months. In the first seven meetings of this year, the interest rate remained at the same level. And finally we come to the August meeting. In the statement made after the meeting of the Central Bank Monetary Policy Committee yesterday, it was stated that the interest rate was reduced to 13 percent.
I always emphasize; I no longer interest for “Central Bank Decision” I’m not saying; “Decision announced by the Central Bank” I say. This obviously happened.
How can it be interpreted?
Honestly, sometimes people don’t know what to say or write…
This is the summary of the situation!
I am reading the statement made after the Central Bank Monetary Policy Committee meeting; the reasons for which the interest rate cut was made; but honestly I don’t really understand. I don’t know if anyone understands this though.
Look, the following views are expressed when explaining why the interest rate cut was made:
“In the rise in inflation; caused by geopolitical developments. energy The lagged and indirect effects of cost increases, the effects of pricing formations far from economic fundamentals, and strong negative supply shocks caused by increases in global energy, food and agricultural commodity prices continue to be influential. The Board foresees that the disinflationary process will begin with the re-establishment of the global peace environment, together with the steps taken and determinedly implemented to strengthen sustainable price stability and financial stability. However, leading indicators for the third quarter point to a slight loss of momentum in economic activity. In a period when uncertainties regarding global growth and geopolitical risks increase, it is important that financial conditions are supportive in terms of sustaining the acceleration in industrial production and the increasing trend in employment. In this context, the Board decided to decrease the policy rate by 100 basis points and evaluated that the updated policy rate is sufficient under the current outlook.
Buttons are fastening incorrectly
Koskoca Turkey is a country where economic theory experiments are made!
You know, I always wrote that in September last year, the first button was buttoned incorrectly, and then all the balances changed, all the buttons came in wrong and the shirt was crooked… Just think about how your shirt will look on you!
The answer to the question of what will happen is clear
The market gave its first reaction immediately. Foreign currency rose.
Because by lowering the interest “I am lowering the yield of my national currency a little more, that is, lowering its value” you say.
The decrease in the value of the national currency, namely the TL, means that the foreign currency appreciates against our currency.
This happened as soon as the decision was announced. Long held under 18 pounds somehow dollar exceeded this level.
If you ask now, “We do not take this decision so that the value of our money will decrease, we take it so that the loan interest rates will decrease and the market will revive” will be called.
In other words, is the only way to lower the loan interest rates in order to stimulate the market, is to lower the Central Bank interest rate?
On the other hand, what will happen when the exchange rate rises? How will its cost be met?
If inflation is in the background now…
The exchange rate has risen and is likely to rise further. I don’t know if enough money will come from Russia or the Gulf countries to suppress the currency. Let’s say it came and we prevented the exchange rate from increasing even more. We kept the dollar at 18.
Well, wouldn’t it be better if we hadn’t lowered the interest rate, but lowered the dollar thanks to this currency?
Don’t we turn around and come here; Indeed, why did we lower this interest?
KKM’s load will increase even more
The biggest trouble in the economy is a bomb with the pin pulled out; currency protected deposit. The further increase in the rate will necessitate paying much more for KKM. Let’s remind; The exchange rate difference that only the Treasury had to pay in the first five months of the implementation was 60.6 billion liras.
As the exchange rate increases, the burden of the Treasury will also increase.