The Monetary Policy Committee of the Central Bank of the Republic of Turkey (CBRT) met yesterday under the chairmanship of Central Bank President Şahap Kavcıoğlu and the seventh interest rate decision of the year was announced.

The Central Bank also left its interest rate decision unchanged this month, keeping the key rate constant at 14%.

Before the interest rate decision, markets started to move.


Following the interest rate decision announced by the Central Bank, economist Dr. Murat Kubilay also shared a series of tweets from his social media account.

Economist Dr. Murat Kubilay also warned with harsh language. “Turkey is heading towards a dark point where it last lived in 1978, that is, in the 1990s. Know this and don’t panic.” said.


Kubilay’s message is as follows:

“1. Turkey is galloping into a balance of payments crisis with the Central Bank meeting it skipped this month. In other words, the issue goes far beyond the dollarization of deposits and the increase in the exchange rate and the explosion of inflation; the exchange rate the resources of the country are about to be exhausted.

2. Money is printed and wages are paid in TL at the expense of inflation, those with currency-protected deposits receive certificates instead of their money, or inflation-indexed wage increases are behind. We are on the path that I call semi-argentinization.

3. There is not enough foreign currency in the country concerned; It’s not that businesses and individuals are turning to foreign currencies. We had a monthly foreign trade deficit of $8 billion over the past 6 months. Revenues from tourism cover only half of this. If energy prices fall with the global recession; On the other hand, our exports are also decreasing.

4. In summary, foreign currency entering the country is very limited compared to outgoing currency. There is almost no more reserve that the Central Bank can sell. In the event of a new financial shock, even domestic commercial banks may not give their currencies to the Central Bank due to the physical demand for currencies.

5. Under current conditions, TL is not worthless, but rather valuable; In other words, there is no foam created by them in December 2021, so it is not possible to inflate this foam and let it dry. For this reason, they are not intended to stop the currency, only to slow its rise.

6. They eased their recently announced capital restrictions as this would negatively affect growth. They cannot impose currency access restrictions for individuals due to voting issues. An increase in interest rates is not possible at the moment, due to Erdogan’s instructions.

7. The result is the balance of payments crisis; failure to pay its external debt and import obligations on time or in full. Turkey still has a chance to get out of this situation, and it probably will; but before that, we seem to fully experience this risk.

8. Consequently, we may have problems accessing fuel, natural gas, food or medicine during the winter months; even if we have money individually. The worst thing is that the economy comes to a complete halt with these worries; national banks cut loans and foreign debts are not repaid.

Until the Central Bank meeting on August 18, 2022, most of the tools in hand will be exhausted. Then either capital liberalization will be reduced a little more, exchange rate increases will not be interfered with, or growth will be seriously interrupted.

10. These are all soft landing scenarios. If we suffer a very severe exchange rate shock, that is, if things get spontaneously and completely out of control, then the administration of the economy will have no such alternatives.

11. Turkey is heading towards a dark point where it last lived in 1978, that is, the 1990s. Know this and don’t panic. What you can do individually is increase your savings and your job security. Beyond that, it’s political; that is, you react as a citizen, not as an investor.”

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