Inflation is supposedly going to fall: Those who don't believe their own words

Do you think the fact that two ministers are constantly forced to make the same statement inspires confidence, or does it show that their damaged reputation is deteriorating even further?

Minister of Justice Yılmaz Tunç states at every opportunity that “Turkey is a state of law, and the judiciary is independent.” I think even a significant portion of fanatical AKP supporters do not believe this statement.

Minister of Treasury and Finance Mehmet Şimşek also says at every opportunity, “our disinflation program is working successfully. There were some minor surprises due to the drought, but inflation is falling.” Neither the public nor the business world, from tradespeople to industrialists, believes that inflation will fall.

I don't know if Minister of Justice Yılmaz Tunç believes what he says, but Minister of Treasury and Finance Mehmet Şimşek does not believe his own words that “inflation will fall.”

If you ask how I concluded this, the answer is simple. You first look at the government's Medium-Term Program and the Central Bank's inflation targets, and then you look at Treasury borrowing.

I made a similar observation on June 15 in 12 Punto. When we looked at the Treasury borrowing in mid-June, many economists raised the question, “despite the expectation that interest rates will fall, why is the Treasury borrowing at high interest rates?” This month, the same situation continues with the Treasury borrowings made on October 8 and October 14.

The Central Bank's inflation target for 2025 was 14 percent. Later, it raised this target to 21 percent. It saw that 21 percent would not be met either. It set an inflation target of 24 percent. It estimated the realization would be 25-29 percent. Now, both the Central Bank and Mehmet Şimşek are talking about 30s and 32s.

This inconsistency in forecasts is not unique to this year. Every year, the Central Bank's inflation targets start at 5 percent and then spiral out of control.

Now we have the year 2026 ahead of us. The government's inflation target for 2026 in the medium-term program is 16 percent... and the 2027 inflation target is 9 percent...

The Treasury must know, just like the rest of us, that these targets are a fairy tale, as in the first half of October, it borrowed at 40 percent interest for 2-year Treasury bonds and 32 percent interest for 10-year Treasury bonds.

The question is clear. Since you have an inflation target of 16 percent for the first year and 9 percent for the second year over the next two years, why did you borrow at 40 percent interest? What does it mean to pay 40 percent interest with the money you collected from the people's taxes in a country where inflation will be 9 percent two years from now? Doesn't such a brutal real interest rate mean the looting of this nation's taxes and the transfer of the nation's wealth to a handful of rentiers?

You claim that inflation will fall to 5 percent after the fourth year. Then why will you pay 32 percent interest to a handful of rentiers with the taxes you collected from the people for 10 years while inflation is at 5 percent? Will inflation in Turkey be at the 28-30 percent level for 10 years?

There is more than one answer to these questions.

Either you are very incompetent.

Or you don't believe that inflation will fall either, but by setting a low inflation target, you are crushing the incomes of the minimum wage earners, retirees, civil servants, and farmers under inflation and continuing a brutal wealth transfer from the low-income segment to the wealthy segment.

Or there are extra-legal plans being made for the future. Turkey's risks in financial markets will increase through extra-legal means. You already feel the need to stock up for the Treasury.

Or, by adding other scenarios we don't know about, it's all of them at once...

This inflation target and long-term borrowing show this: Future budgets will go toward interest payments even if this government changes.