Burcu Göksüzoğlu / FINANCE CHATS
* Jumbo from the Fed (100 basis points) when you consider the growth and inflation outlook in the US interest increase income? How does the market move?
In the USA, economic decisions, especially monetary policy decisions, do not only concern the USA. It concerns the rest of the world, especially developing countries. That’s why we follow it very closely. Downside risks in growth and upside risks in inflation persist. Especially the latest inflation data came as a little negative and surprised us all. As such, there was a concern that there might be a break in expectations. While it was discussed before about 50 or 75, economists headed by Larry Summers say, “Don’t tremble, Fed. Make 100. Hold tight from the very beginning”. As a person who works in monetary policy, I like heavy front-loaded interest rate hikes and interest rate movements, but it also has consequences on the growth side. That’s why we look at the following while studying the US economy at TSKB; Central bank interest rates are increasing by 75-75, but what about market rates? When we look at it, we see a very serious tightening especially in housing interest rates. So I guess 100 basis points will be discussed. But still, 75 basis points seems reasonable, unless some later data change your mind. If it is 100 basis points, the initial reaction will be negative in developing countries. A front-loaded increase can relax the hand in the next increase, it will be useful in shaping expectations. However, I would like to add that while we are discussing ’50, 75 or 100?’ on the Fed’s side, the most important thing for developing countries like us is the Fed’s balance sheet. If the Fed moves things that way as well, that is, if there is a quicker liquidity draw than we thought, then we should have much more serious concerns.
* What about the CBRT? He surprised me with a surprise interest rate cut at the last meeting. What does he do this week?
As you said yes, we could not foresee the interest rate cut there as a market. When we look at the Central Bank’s MPC rating, the written communication there does not actually signal an interest rate cut for this month, but the developments and the data-dependent nature of monetary policy do not completely block an interest rate cut. I would like to say this too. In other words, there was such a thing in written communication, but I think the development of the data, the events in the world, the stance of the Central Bank, the monetary policy it follows leave the door open for the possibility of another interest rate cut this month or next month, but at the moment, this is a baseline scenario. not.
* In the last text, the CBRT said that it would support the economy due to the downside risks in growth, but while commercial loan rates went down, loan growth lost momentum. Does the CBRT support the economy?
This is a question I take very seriously because sometimes the demand for credit is thought of as merely a function of cost. In other words, it is thought to be a function of the loan interest rate. This is actually not very realistic. The interest rate is very important, but the developments in the world and whether you can see your future or not are the things that will determine your loan demand. It points to a period in which it is very difficult to see ahead for both the private sector and investors in the global economy. For this reason, especially on the European side, this is a region that affects Turkish exporters and Turkish producers, and while there are risks, the demand for credit will not be a function of interest alone. I think that understanding and clarification of the uncertainties there will reveal the balance here. It’s not at that point right now. Therefore, does the Central Bank support the issue, does the private sector have a demand, can it reach it? Yes, this is a point of the subject, but I think that should not be the point we are going to talk about right now.
* Is the CBRT in the field? How do you evaluate its policy?
Our Central Bank informs us about the liraization strategy and we try to understand the Central Bank’s policy through this communication. In particular, we see that macro-prudential measures come to the fore. We talk a lot about our Central Bank in Turkey, but fighting inflation or a general policy. economy policy is not limited to central banks. Central Banking is not just about interest, although it is the most popular tool. When we look at the picture in Turkey, we see that our Central Bank is trying to create a movement on the monetary transmission mechanism with macroprudential measures, especially in the credit channel. Is there an effect of this movement, for example, we see that the effect on the yield curve is downward at the moment. Therefore, it seems that there is an answer for this, but when we look to see if it has a counterpart on inflation, we are not in a position to get this answer at the moment. Yes, there is a decrease in the expectation survey, but it is still far above our inflation target.
More than 90 percent of TSKB’s loans are compatible with sustainable development
Could you briefly talk about TSKB’s outstanding work in the field of climate?
We are a development bank and we have an obligation to match what we say with what we do. We are trying to support sustainable development, the fight against the climate crisis, and gender through the consultancy we provide, both on the development bank side, on the investment banking side, and on the corporate banking side. When you look at the loans given by TSKB, you see that more than 90 percent of them are compatible with sustainable development goals. Again, more than 60 percent are directly related to the climate and environment. For us, change, a change for development, a transformation against the fight against the climate crisis is very important. But we are also an actor that triggers and supports that transformation and tells our stakeholders, let’s do this work together, and we have set our goals in a way that will continue to be inclusive and sustainable. There was a term that economic studies suggested 3 years ago: ‘green swan’, the climate-talking part of the black swan, that is, unpredictable, climate-related low-probability, high-severity risks. And within the framework of the green swan, we carry out our bank’s activities as a club in order to see how we can cooperate with our stakeholders.
The climate crisis is not just a climate crisis
* Will there be an upside pressure on prices due to climate crisis shocks on the supply side in the upcoming period?
For years, we have been talking about climate among our macro problems because these two are not independent of each other. Let me give an example, for example, in Chile, some decisions were taken to reduce the production of copper mines due to the fight against the climate crisis. Now, when we follow this up, it is not just the climate crisis, but this decision has an upward effect on copper prices in the world. Therefore, the climate crisis is not just a climate crisis. The climate crisis is also the data of a very important macroeconomic and microeconomic ecosystem. But on the other hand, there will also be risks posed by the steps taken to combat the climate crisis. The most important of these is the European green order. But Korea has it, other countries will come too. Climate club established. These can turn into a trade barrier. Then, as a country, will you be able to overcome this barrier or not? What do you need to do to overcome it, what will be the effect on your growth if you can’t? You need to talk about them. All of the steps taken in the fight against the climate crisis are at a point where they will affect our scenarios on the macro front, not just 5 years, 10 years later, but now.
* Where is the CBRT in green central banking?
You know, we held a Climate Council. Our Central Bank participated very actively in this. And for the last few publications, we see that our Central Bank has been referring to the climate crisis. This is very important, but green central banking is very new in the world. Our Central Bank is also at the head of an initiative that follows the literature in the world on this subject and conducts studies on climate within itself.