The season has come, it’s time to lower interest rates!

The season has come, it’s time to lower interest rates!
The season has come, it’s time to lower interest rates!

The job description of the two institutions has almost changed:

✔The main task of the Central Bank was to remove the barriers to growth.

✔The task of ensuring price stability was given to TÜİK.

You know, there are seasonal discounts on clothes, we also have seasonal discounts in the economy. Since the subject will not be clothes, we also do this in interest… Moreover, it seems that the discount season will be a little longer this time.

Remember, the discount started in September last year. This year it was pushed back a month and started in August.

The interest rate, which was applied as 14 percent in the first seven months of the year, was reduced to 13 percent last month, and the interest rate was lowered by one point to 12 percent yesterday.

It’s the season! From now on, we will reduce the interest by one point, one point each month.

11 in October, 10 in November, 9 in December, 8 in January!

8 percent is good enough!

Do not you think; it will happen!

It would be fine too! In December and January, the annual increase in inflation will also decelerate to a large extent.

It is clear what to say:

“Here comes the interest rate, inflation has dropped!”

Why was the interest rate lowered?

In the statement made after the Central Bank Monetary Policy Committee meeting, the following is stated about the interest rate cut from 14 percent to 13 percent:

“In a period when uncertainties regarding global growth and geopolitical risks increase, it is important that financial conditions are supportive in terms of maintaining 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.

There is an interesting case:

In the statement made after the August meeting of the Monetary Policy Committee, the above statement was exactly the same; The point, even the comma, was the same.

Is there a word, “In these days when we need unity and solidarity more than ever” it begins… You will say this tomorrow as well, it means that the need for unity and togetherness will increase gradually; Therefore, the day you speak of, that need is actually less than tomorrow.

Now, the Central Bank’s statement was a bit like that. In August, the interest rate was reduced to 13 percent. “Under the current outlook, the updated policy rate is considered to be sufficient” but after a month, it turned out that that update was not enough.

Therefore, we should not be surprised if we read the same text in the meeting statements of the coming months and if the interest rate is regularly lowered.

Trying to connect is pointless

The policy rate of the Central Bank was being lowered, however, the inflation was gone, when the interest rate was lowered, the exchange rate would increase and inflation would accelerate; How could we lower it when all countries are increasing interest rates; BLA bla!

We’re past that now.

Our new normal is different now.

Because the roles of institutions have changed.

The main task of the Central Bank is no longer to ensure price stability. Central Bank for the sustainability of growth “hidden” It has been a long time since it turned into a commissioned institution.

But another institution has to undertake price stability. That task was taken from the Central Bank and again. “hidden” was given to TURKSTAT.

Therefore, it is useful to know about new assignments and evaluate accordingly.

“What if other countries are doing it wrong!”

The following was expressed in a letter to a reader recently:

“And how do we know that other countries that have increased interest rates to fight inflation are not doing anything wrong!”

Although America and Europe increased interest rates, inflation was also increasing, the interest rate hike did not work; but because the interest rate was lowered in our country, inflation would decrease!

It’s actually true; we already know that the annual inflation rate will decrease after a while.

Isn’t it beautiful!

What is the inflation rate in those countries, where did it come from?

Beyond that, what level of living standard is for them, at what level for us…

Don’t think about all this, don’t think, don’t want to think; then only in the next months “will occur spontaneously” link the slowdown in inflation to the interest rate cut!

The article is in Turkish

Tags: season time interest rates

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