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On Wednesday, the president of the Central Bank of the Republic of Turkey, Naci Ağbal, “Monetary and exchange policy in 2021” He made his named presentation. Ağbal, as commander of the Lira, declared war on inflation and the resulting dollar surge.
In our article, we will describe our reasons why you will lose this war, based on the statements of Naci Bey. First of all, we must point out that we have no doubts about the knowledge, experience and talent of Naci’s brain. As one of our sayings goes, Mr. Naci “does not bleach his hair in the factory”, but the Turkish economy, facing great problems, cannot recover with the efforts of one person. Now let’s look at Naci Bey’s important explanations:
“If necessary, we will further tighten our monetary stance.”
The conclusion of this statement is that if the dollar / TL increases depending on inflation, I will not hesitate to increase the interest rate to control the rate. So if you plan to increase interest rates in the future, how will investments in this country increase? How will unemployment go down?
We can look at the interest rate hikes, which he calls Naci’s brain tightening, as a guarantee because the necessary steps were not taken to reduce the prices of products in agriculture and industry to reduce inflation. Not done. The government is trying to soften the mood by saying spring, summer. But we are in the middle of the winter that was forgotten.
Reducing inflation is not just the task of the Central Bank, that is, Naci’s brain. Because inflation is not just a monetary phenomenon in Turkey. As mentioned above, poor quality and a small amount of agricultural / industrial production are the root of inflation. How will inflation decrease before production increases in the real sector?
“It is our duty to help households invest their savings in more TL assets.”
Why do households receive dollars? Because you can’t lower inflation. What we cited above as the reason for inflation ‘drop in agricultural production’ Is it Naci’s brain’s job to correct? The head of the Central Bank can only contribute to the fall in inflation by determining the amount of money and interest rates. This statement indicates that the problem was misdiagnosed from the beginning. It is impossible to convince the people of Lira with financial matters until the royal wing improves.
The same is true for industrial goods. The external production system increases the cost as the exchange rate increases. So how will you reduce inflation while the external link in the industry continues?
Real policies will not support Naci Bey. This will make Naci Brain alone in the steps it takes. As interest rises, investments will decline, industry rage and screams will be heard from the Palace. When the amount of money is reduced, economic activities will decrease and merchants will scream. It will eventually continue until Naci Bey is fired …
Using monetary policy, that is, setting the amount of money and interest, they ask Naci what he will do if the policy interferes with his business, the answer is:
“It would not be correct for me to make a political evaluation. As head of the CBRT, as a public official, my duty is to work day and night in accordance with the price stability established in the CBRT law.”
If only Mr. Naci had said this: if necessary, we will write letters of recommendation to the government to take action on the real sector. As Head of the HM, my independence is the fundamental principle and I resign if there is intervention.
However, with Ağbal’s description, the Japanese suicide pilots remember the kamikazes. Who can question the patriotism of these mission-driven pilots who believe in a holy war? Naci Beyde managed to manage the AKP situation until 2023 and will fight this holy war until he is fired for this cause. However, just as there will be no reform saying reform, inflation will not decrease saying that inflation will decrease.
We will see together how long the dreams of summer, which were established when the Turkish economy was in the dead of winter, will rule the Turkish people who are in the cold.
