The Kapali Carsi

Weed, Hair Gel and Turkish Monetary Policy

I AM BACK at Economonitor after a long absence, during which Turkey went through #occupygezi and is now in the midst of a major corruption scandal. I have been continuing my columns at Hurriyet Daily News (HDN), and for my first post, I would like to post today’s column.

Turkish inflation turned out to be 7.4 percent last year. Central Bank Gov. Erdem Başçı will have to write a public letter to economy czar Ali Babacan to explain why the 5 percent inflation target was missed by a significant margin. One of the best-kept secrets of Turkish economic policymaking is the preceding private letter, which I was able to get hold of.

Here’s the intro. to my latest HDN column, where I reveal the “secret letter” from Basci to Babacan. You can read the letter at the HDN website– as well as find out what weed and hair gel have to do with Turkish monetary policy.

I should not be giving spoilers, as the goal there is to have you click at the website and boost my statistics, but for those who are too tired or lazy to click the hyperlink: The main argument is that the Central Bank will have to resist rate hikes as much as it can, though it is facing pressure (not from columnists, but markets) to raise rates, as a recent WSJ article argues.

I will keep this post short; you don’t run a marathon after being inactive for the past 6 months. But I will be posting tomorrow, probably on the inverted Turkish yield curve…

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