Mahfi Eğilmez explains: Interest rate cuts led Turkey to losses

Economist and former Treasury Undersecretary Dr. Mahfi Eğilmez, discussed the interest rate cuts implemented by the Central Bank of the Republic of Turkey (TCMB) in September 2021 during his appearance on CNBC-e.

Eğilmez recalled that at that time, both inflation and interest rates were at the 19 percent level, emphasizing that the TCMB should have increased interest rates, taking into account that inflation was on an upward trend.

CONSEQUENCES OF THE INTEREST RATE CUT

Eğilmez stated that the Central Bank did not implement the expected strategy, saying, “Our inflation would be somewhere around 10 percent today if we could have continued that way. However, Turkey did the exact opposite and started cutting interest rates.” Expressing that exchange rates skyrocketed following this decision, Eğilmez said that the TCMB introduced the foreign exchange-protected deposit scheme to correct this situation.

CONTINUING TO INCUR LOSSES

Eğilmez stated that the TCMB suffered a major loss as a result of its incorrect policies and that this loss is still continuing. Saying, “The Central Bank incurred a loss, and it continues to incur losses. There is still a very large loss,” Eğilmez emphasized that this situation has created negative effects on the Turkish economy.

News Source: 12punto