Rate re­lief?

From psy­chol­ogy to pathol­ogy, our colum­nists break down the CBRT in­ter­est rate cut

Dünya Executive - - COVER PAGE - Nevzat SAYGILIOGL­U Colum­nist

Ire­ally do en­joy the ti­tle of the ar­ti­cle. In fact, the ex­pres­sion “horses are put be­fore the cart” is more valid in this case. How­ever, the ex­pres­sion “putting the cars be­fore the horses” evokes the idea of the duty be­ing done con­trary to a con­ven­tional way. That is to say, it means putting off the as­sign­ment that needs to be done pri­mar­ily and thereby be­gin­ning the as­sign­ment from re­verse. Now, there is a sim­i­lar sit­u­a­tion go­ing on: the to­tal­ity of the po­lit­i­cal econ­omy is faced with the risk of sinking into obliv­ion and only the mon­e­tary pol­icy path is put for­ward.

The March 31 elec­tions and the ad­di­tion June 23 Is­tan­bul Metropoli­tan Mu­nic­i­pal­ity elec­tions are over. With the ap­peal of no elec­tions for the next four years, now it is time to work on reg­u­la­tions re

gard­ing the econ­omy. But more than one month has passed. Once again, there are no ef­forts or news on struc­tural or in­te­gral ad­just­ments re­gard­ing the econ­omy.

Dur­ing this pe­riod, former Cen­tral Bank Gover­nor Murat Cetinkaya was the one who lost. He was dis­charged on the ac­cu­sa­tion of not be­ing com­pat­i­ble with the gov­ern­ment. We con­tin­ued to take our chances be­tween Murat Uysal and Murat Cetinkaya and hoped for a rate cut from the new gover­nor and the Mon­e­tary Pol­icy Com­mit­tee. Along with the rate cut, a se­ri­ous eco­nomic pol­icy tool or ar­ma­ment was used.

The rate cut will re­duce the de­posit rates and thus this will cause a de­crease on the credit rates. It will be fol­lowed by a sea­sonal or on-de­mand fall on in­fla­tion. In this case, will the de­crease on in­ter­ests and in­fla­tion be per­ma­nent? Will the ex­change rates stay the same?

Hence, we will have used an im­por­tant tool and will be out of bul­lets, so to speak.

In fact, when you think of it, it is bet­ter to form a re­li­able po­lit­i­cal and tech­no­crat team and de­velop an eco­nomic pro­gram af­ter­wards. Wouldn’t struc­tural ad­just­ments re­gard­ing ed­u­ca­tion, jus­tice and agri­cul­ture take the pri­or­ity for the eco­nomic poli­cies to op­er­ate ef­fi­ciently? Wouldn’t it be bet­ter to put the two main com­po­nents of eco­nomic pro­grams, the fis­cal and mon­e­tary poli­cies, in ac­tion as in­te­grated and as­sist­ing one another?

For in­stance, would it be right to state that ex­penses, tax­a­tion and bor­row­ing, thereby the bud­get pol­icy, op­er­ates ef­fi­ciently? Is it pos­si­ble to truth­fully state that fis­cal poli­cies ex­ist to­day and are im­ple­mented ef­fi­ciently? When busi­nesses com­plain about the un­fair and in­ef­fi­cient tax regime, con­trac­tors can’t get a fair com­pen­sa­tion for the past 7 months and the gov­ern­ment can’t even carry out rent, ad­vance and sub­sis­tence pay­ments, is it pos­si­ble to rec­og­nize a healthy fis­cal pol­icy?

Nowa­days, it is a fact that ab­so­lute mon­e­tary poli­cies fall short and with­out a doubt need to be im­ple­mented in ac­cor­dance with fis­cal poli­cies, and that mon­e­tary and fis­cal poli­cies only op­er­ate ef­fi­ciently through an ap­pro­pri­ate ecosys­tem. Con­se­quently, if we re­fer to the be­gin­ning of this ar­ti­cle, we have put the cart be­fore the horse by putting off the top pri­or­i­ties and putting lower pri­or­i­ties to the front.

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