Fed decision is good for CBRT…

Federal Reserve has finally released its decision to keep the rates steady. The statements that have been made just after the decision, however, were quite interesting.

Declaring that they are facing a totally unexpected result regarding inflation rates, Fed’s FOMC, a committee serving a similar purpose with CBRT’s Monetary Policy Committee in Turkey, says that American economy generally shows a good performance. The fact that there is a significant gap between expected and the actual inflation has raised concerns in minds.

These concerns are essentially based on the following fact: when the gap between expectation and actualisation widens, fluctuations get sharper. I’m thinking about providing you with more details regarding this issue.

I’d like to remind you that this was Yellen’s final meeting as Fed Chair. I say farewell to her with respect as she was wise enough to revaluate what she currently has on hand and wait a little longer instead of directly going for a rate hike just before leaving office. We watch deserving and worthy people in key positions sadly quit one by one under Trump administration.

“Watch out for debt payments in February and March…”

Now, let’s take a quick look at Turkey: It can be observed that USD/TRY is slowly going down in parallel with dollar‘s global move. The fact that CBRT’s last decision to hold the rates at current levels was strengthened by Fed decision would bring a more positive attitude into markets.

While CBRT’s next decision is due to be announced on March 14th, the one by the Fed is expected on March 21st. Who knows? CBRT may take another chance on keeping the rates steady. I, on the other hand, am hesitant to speak so precisely because of recent statements about the inflation, even though the experts say, “CBRT will definitely hike rates in March”.

By the way, Treasury has a huge upcoming payment in February, which will naturally require a huge borrowing. Also a big external debt payment will be on the horizon in March. It seems like things will remain relatively calmer in April. Although the Treasury is not to increase net borrowing, I just hope we will safely go through the next two months.