Yesterday was the decision day for the Central Bank. Things got so twisted that everyone said, “We are doomed if CBRT does not hike rates”. This cry for help made me think of Turkish national football team’s most recent match.
While I was watching Sweden-Turkey game, I could not help but notice that our National Team kept playing fearlessly even the score was 2-0, and won the game 3-2 with some very wise manoeuvres. During the last 20 minutes of the game, I thought to myself , “Sweden thinks that they will the game through strong defence but they are so wrong” And they were because they lost the match. Success is not a surprise when you keep working hard to overcome all obstacles.
However, old habits have relapsed again, occasionally during the game. Players tried hard to extend the time by meaninglessly shooting balls from the defence zone, which helped the rival team to come closer towards our goal post even when they had no strength left. We would have almost present a win to Sweden as a gift with our own hands. Instead we should have kept putting pressure on the rival team without giving them the ball just like we did in the second half. We could have won the game even by 5-2. But it does not matter now cause it is a great score too.
Yesterday the Government has somehow managed to make CBRT decision even more critical. Treasury made any move except for some very disputable decisions regarding the Decree No 32. Therefore CBRT was left with the task of hiking interest rates.
“Has the CBRT really proved its adequacy?”
I think the current state of ease in markets will only be temporary despite drastic rate hike. Exchange rates and interest rates will begin climbing up again soon if the Economy administration does not take any other measures. The possible negative scenarios will put the CBRT management in the firing line, especially if the recent move they made right after President Erdogan’s statements on interest rates only creates a transient impact.
In short, CBRT management has led itself into a dead end. They were forced to hike rates whereas they should have maintain a strong stance. If exchange rates do not fall in a stable manner and if people come to the conclusion that rates hike did no good whatsoever to the economy, we should better get ready to face big problems again.
Here is my answer to those declaring that the CBRT has proved its independency. A central bank is either independent or not. Accordingly, it is not right neither to turn this issue into a taboo nor constantly arguing over it. Has the CBRT suddenly become independent when yesterday it made a drastic rate hike which should have been done months ago?
The answer to the question above is hidden within the last 20 minutes of Sweden-Turkey game. I advise you to watch it and learn it if you think, of course, you will not get bored through the halfway. Hard work and discipline lead to success. Those who stick to this motto always leave their marks in history. And the rest sinks into oblivion.