A Turkish translation of the new Central Bank Governor's speech: 'We will tighten the noose on workers, civil servants, and retirees'

12 Punto columnist and economist Meriç Köyatası evaluated the new Central Bank Governor's first press conference. Köyatası stated, "The message the Governor gave to market actors is that we will not raise interest rates. If inflation does not fall from May onwards, we will move toward monetary tightening. If it falls, we may loosen it. But what he says between the lines signals that they will severely tighten the noose on low-income earners. Their target in the fight against inflation is not the demand of the wealthy 20 percent of the population. They have set their sights on workers, retirees, and civil servants whose real income and demand have fallen."

Köyatası also said he found the Central Bank Governor's year-end target of 36 percent and the 5 percent target for two years later to be very optimistic, adding that the real inflation rate at the end of the year would be at the 140 percent level. Here is Meriç Köyatası's initial assessment:

"I think it is necessary to translate what the new Central Bank Governor Fatih Karahan said at the press conference into a language everyone can understand. Let's put aside talk of raising or lowering interest rates and monetary tightening. I understand from his words that they will severely tighten the noose on workers, civil servants, and retirees.

I am warning workers, retirees, and civil servants. This election is your last resort. Forget about austerity; they will tighten the noose on you. Never mind the hunger; the new governor also wants you to freeze to death. It is a good thing the weather will warm up after the election. What did the Central Bank Governor say? And what do his words mean? Let's translate them in order.

The Central Bank Governor said: Inflation entered an upward trend in the last quarter of 2023. It increased even more in January. There will be an increase until May, and it will fall after May. There are different reasons for the high inflation increase in January. Minimum wage increases and administered price hikes that were above expectations, and also the exceeding of the 25-cubic-meter limit in natural gas usage...

Turkish translation: He cannot call the price hikes the state made on fuel, taxes, and fees 'government-imposed price hikes,' so he calls them 'increases in administered prices.' The big scandal in the speech is that natural gas consumption exceeded 25 cubic meters, and inflation increased in January because of that! We are in January; it is snowing and freezing cold. He is saying, 'We couldn't starve you to death, so you might as well freeze to death.'

As for the other inflation justification... Minimum wage increases were higher than expected. It is clear that the governor either does not understand 'statistics, mathematics, and economics' or he is an anti-labor figure with a mindset of 'how well we could manage the economy if it weren't for the workers.' Furthermore, he is not aware of when workers receive their wages. We have written and explained this many times. Let us remind the new governor: The minimum wage determined in December entered the worker's pocket at the end of January. Did the worker who received their old salary in January cause inflation? Moreover, the minimum wage increase, which he said was higher than they expected, has declined significantly in real terms against actual inflation. An increase in demand from a segment whose share of the national income is falling does not raise inflation. The consumption of a segment whose income is falling in real terms also decreases in quantity and does not cause inflation. And of course, his biggest blunder is that he acts according to TÜİK (Turkish Statistical Institute) data on inflation, which is another misfortune.

The minimum wage was 8,500 TL in the first month of 2023 and 11,400 TL for the second six months until the end of the year. The increase rate was 34 percent... According to the 'makeup artist' TÜİK, the year-end inflation rate was 65 percent, and according to ENAG, it was 127.11 percent. The purchasing power of the 11,400 TL at the end of the year fell to 5,022 TL at the beginning of 2023. I hope there are still employees at the Central Bank who know statistics. Have them calculate it. (11400/1+1.27 = 5022) I will explain the details in my Sunday column.

NO RAISES FOR ANYONE IN JULY

The Central Bank Governor said: 'We will see a rapid decline in inflation after May. We think that wage expectations will have fallen.'

Turkish translation: Money will be distributed generously due to the elections. Also, promises of high raises for the second six months will be made to civil servants and retirees for the end of July. But our 'little boss' Mehmet Şimşek had already said it before. From now on, raises will not be made twice a year, but once a year, and they will not be aimed at compensating for past inflation, but according to the inflation rate we target. Those waiting for the inflation difference that will rise until May after the election will be disappointed.

My opinion is this: The new governor will also not be successful in the fight against inflation. Because he cannot analyze the real causes of inflation. He did not say a single word about the government's budget deficits and fiscal policy creating inflation. He does not have the independence or power to say those words anyway. It is all about demand increases linked to wages... The income of 80 percent of the population has decreased. In a country surrendered to the 20 percent and black money, he does not look at the consumption demand of those who benefit from the blessings of black money or the opportunistic inflation expectations of price setters; instead, he looks at the consumption of people who are starving and freezing from the cold. We have brought this issue up many times. How much has the real consumption of workers and retirees decreased despite the wage and salary increases? We will go into the details again in our column on Sunday.

News Source: 12punto