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Professor of Applied Economics at Johns Hopkins University. Steve Hanke, found surprising comments on the state of Turkey’s economy.
In evaluating the Central Bank’s decision to raise the interest rate, Hanke said that this is the right step and that it can temporarily relieve the Turkish lira; However, he said that interest rates should rise further to reduce inflation and halt the depreciation of the Turkish lira.
“THIS DECISION DOES NOT PREVENT THE LOSS”
Speaking to VOA Turkish, Hanke said: “Unlike most analysts, I was not surprised by the Central Bank’s decision on interest rates. The reason for this is the inflation and depreciation of the Turkish lira day by day. He announced that the official inflation rate in August was 11.7 percent in Turkey; however, based on the high-frequency data I have taken as a basis, the actual inflation rate is 36.87 percent. Three times the officially announced figure. This shows us that Turkey’s monetary policy is far behind now, “he said.
Steve Hanke said: “The decision made by the Central Bank may temporarily stabilize the Turkish lira. However, the depreciation of the Turkish lira will continue. To avoid this, the Central Bank should increase the interest rate even more. “If the Central Bank is serious about reducing inflation and balancing the Turkish lira, there will be a further increase in interest rates,” he said.
“IT CANNOT BE DEPENDENT ON ERDOĞAN”
The question of whether it is an indicator of interest rate decisions on the independence of the Central Bank – is Steve Hanke’s answer, “I don’t think anything can be independent of President Erdogan in Turkey. such a thing independently and unilaterally without giving the President the green light ”.
“THE GOVERNMENT HAS ONE THING TO DO”
Turkey said the moment is almost empty of foreign reserves, Hanke assured, “The next few months are a few months with too much debt to pay. The current account deficit is also very high. One reason for this is the decline in tourism revenue. The current account deficit is 4 percent of the Gross Domestic Product “This is a very high rate.”
Hanke, “condition cornered by Turkey.” You do not have enough resources to pay debts. Therefore, the only thing that can be done is to pay off the foreign debt with a higher interest. I’m not sure if the Turkish government would like to do that. If you do something like this, there is a danger of a recession. Turkey faces a complete dilemma, “the assessment concluded.
