What did the Central Bank say (and don’t say)?

 
The inflation report issued by the Central Bank last week showed us that:
 
- For the first time, the Central Bank has clearly and transparently stated next month’s expected inflation rate.
- Apparently, the Central Bank didn't want to damage his reputation by increasing its year-end target only by two basis points.
- Although the Central Bank says no green light yet for a transition to the free market economy, it appears preparations are under way.
- There is no longer possibility of hiking rates.
- The Central Bank will use every opportunity to replenish the foreign exchange reserves.
 
So, basically, the report translates into:  
 
- The Central Bank did not do what it was supposed to do, or did very little of it so as to avoid putting the Government in a difficult position before the local elections.
- The Central Bank basically admitted that it was trying to keep the exchange rates in check by restricting swaps, seizing foreign currency revenue from exports, and selling foreign exchange reserves.
- The Central Bank put pressure on banks to increase interest rates, yet most banks were not exactly willing to cooperate.
- The Central Bank also acknowledged that it had deviated from the initial economic plan due to the 4 to 5 point unforeseen rise in inflation, which it could not admit that it was of their own doing.  
- The Central Bank avoided saying that they were late hiking rates, instead, they chose to praise their supposed strong increases.  
- And the fact that the Central Bank said "Even if we raise interest rates further, we will not be able to reduce inflation" actually means that they will cut rates at the first chance they get.
 
In short, it looks like the Central Bank, which has not done much it terms of central banking, is to embrace, with the help of the base effect, a more balanced and market-friendly approach by putting an end to its current securities policy and preparing to remove restrictions on swaps.
 
The members of the current Central Bank team could have done all of this as soon as they took office, but they didn't. Instead, they tried to do their jobs as much as they possible could under the circumstances, that is without angering the Government, which eventually led to an inflation rate exceeding 70%. Critical decision-makers should do whatever they are supposed to do before it is too late, before things get to an almost irreversible stage.  
 
Yet, I'm still waiting for a real, a substantial change in bureaucracy. Because I think these remedial measures will not be enough help Turkish economy improve anytime soon.