Erdogan’s nas era is officially over
AKP President and President Recep Tayyip Erdoğan, who led Turkey to 2022 with a new economic model by saying “My field is economics, I am an economist”, resigned from the policy he had been implementing for a year and a half with the thesis that “interest is the reason, inflation is the result”.
At that time, Erdogan told critics of economists that “interest is the cause and inflation is the result” at that time, “As long as I am in this position, I will continue my fight against interest to the end.” What is clear about this? What happens to you, to me, now that you’re in the middle? he had responded.
As the criticism continued, Erdogan again gave religious references, saying:
“What is it, sir? We were lowering interest rates. Don’t expect anything more from me. As a Muslim, I will continue to do whatever it takes. Alhamdulillah we are on the right path. Because the rule that interest makes the rich richer and the poor poorer is not a common rule for us.”
FIRST TIME AFTER 27 MONTHS
President Erdoğan declared that he still defends this thesis, but that he accepts the steps that will be taken by the Minister of Finance Mehmet Şimşek and the Governor of the Central Bank, Hafize Gaye Erkan.
The Central Bank increased the policy rate by 650 basis points to 15 percent in the first monetary policy meeting held under the new president, Gaye Erkan.
Under the low-interest policy, which caused a heavy loss in the LT and a rapid increase in inflation in the past two years, the CBRT gradually lowered interest rates by 1,000 basis points and lowered them by 50 basis points. up to 8.5 percent. to support recovery after the February earthquakes.
With today’s decision, the CBRT has raised interest rates for the first time since March 2021.
BIG LOSS OF VALUE IN TL
The dollar/TL exchange rate, which was 12.96 on November 30, when Erdogan announced the ‘new economic model’, rose to 18.36 on December 20. The dollar-based model, which it tries to maintain by using CBRT reserves and indexing TL savings to foreign currency with protected deposits, has nearly doubled in value since its implementation and hit 24 lira.
INFLATION EXPLODED
Official annual consumer inflation was 19.25 percent in August 2021, before the CBRT began cutting interest rates. The CBRT policy rate was 19 percent. In November, when Erdogan announced the new economic model, inflation was 21.31%, while the policy rate was lowered to 15%. In the period the model was applied, official inflation reached a new high in the 21-year AKP rule.
On January 29, 2022, “You know my fight with interest, we will lower and lower interest rates. Know that inflation will also decrease, it will decrease even more. The exchange rate stabilizes, inflation decreases and the increase in prices disappears. Erdogan said, “This is all temporary,” and when he couldn’t bring inflation down during the year, he dropped his promises until 2023. He ended the year 2022 with the words, “Everyone should do their math according to 20 percent inflation.” in 2023″. However, inflation is at the level of 39.59 percent, according to the latest data announced by TURKSTAT.