Exchange rate forecast from prominent economist after the Central Bank’s interest rate decision

The Monetary Policy Board of the Central Bank of the Republic of Turkey (CBRT) kept the policy interest rate constant at 14 percent. Kerim Rota, Head of Economic Policy of the Future Party, who evaluated the exchange rate forecast of the PPK after the interest rate decision said “I think that an upward movement in exchange rates will be inevitable in the medium term.”

The CBRT had started the process of cutting interest rates in September. The bank made 500 basis point interest rate cuts in September October November and December, in total. Thus, the policy interest rate was reduced from 19 percent to 14 percent.

As inflation concerns increased with the exchange rate crisis, the CBRT Monetary Policy Board (CBRT) kept the policy interest rate constant, which was 14 percent.

Evaluating the interest rate decision of the PPK, Kerim Rota, Head of Economic Policy of the Future Party, said: “The Central Bank’s policy interest rate has already been disconnected from the realities of Turkey and the realities of inflation. I don’t think it’s a decision worth discussing too much.”

“IT WILL BE THE FIRST TIME IN TURKEY’S HISTORY”

Speaking about the inflation expectation, Rota said, “The Turkish lira is at its most worthless level since 1994. The increased minimum wages will be paid at the end of this month. The TURKSTAT hunger limit will probably be over 4,250 Turkish Liras. It will be the first time in Turkey’s history when it is seen from this point of view. Minimum wage falls under hunger limit in June or April. This is the first time I’m going to see it fall below that before the minimum wage takes hold. This shows that we are in a very high inflation spiral.”

“UPWARD MOVEMENT IN EXCHANGE RATES IS INEVITABLE”

Rota also said following: “I think this is a time-out/break taken to avoid experiencing the exchange rate shock faced in November and December, again by keeping the existing interest rate of 14 percent until end ot March. However, I think that an upward movement in exchange rates will be inevitable in the medium term.”

“I DON’T HAVE MUCH HOPE”

Rota went on to say “The relative improvement in exchange rates has opened a window of opportunity for us. We have a short-term, maybe a few-month window of opportunity to use this window of opportunity in the company of rationality of the mind and knowledge. I hope that those who govern us, those in the economic administration, Mr. President, will enter through this window of reason and start a serious fight against inflation in Turkey. I don’t have much hope.”

SOURCE: cumhuriyet.com.tr/ekonomi/merkez-bankasinin-faiz-kararinin-ardindan-kerim-rotadan-doviz-kuru-tahmini-1901544?_n_pid=6063