I love your analogy of ‘you can’t push a string’. And I get the sense that the central banks are just muddling their way through things - impotent indeed.
But what’s up with Turkey, jumping their rate to 15%? Is that normal for them, or a reflection on their recent election results, or is their economy becoming increasingly nervous about their geopolitical location?
I love your analogy of ‘you can’t push a string’. And I get the sense that the central banks are just muddling their way through things - impotent indeed.
But what’s up with Turkey, jumping their rate to 15%? Is that normal for them, or a reflection on their recent election results, or is their economy becoming increasingly nervous about their geopolitical location?
Erdogan has for a couple of years now had the odd idea that cutting interest rates is how you bring down inflation. Suffice it to say, it hasn't worked.
Erdogan is, to put it mildly, rather eccentric as far as world leaders go. Interest rates are a razor-sharp double edged sword, so there is a kernel of truth to the idea that cutting rates may bring down inflation, depending on whether it is demand-pull or cost-push inflation, of course. For the former, it is best to raise interest rates, while for the latter it is best to cut interest rates. Either way, we are seeing the limits of what central banks can actually accomplish.
I love your analogy of ‘you can’t push a string’. And I get the sense that the central banks are just muddling their way through things - impotent indeed.
But what’s up with Turkey, jumping their rate to 15%? Is that normal for them, or a reflection on their recent election results, or is their economy becoming increasingly nervous about their geopolitical location?
Erdogan has for a couple of years now had the odd idea that cutting interest rates is how you bring down inflation. Suffice it to say, it hasn't worked.
So now he's trying a little shock therapy.
Erdogan is, to put it mildly, rather eccentric as far as world leaders go. Interest rates are a razor-sharp double edged sword, so there is a kernel of truth to the idea that cutting rates may bring down inflation, depending on whether it is demand-pull or cost-push inflation, of course. For the former, it is best to raise interest rates, while for the latter it is best to cut interest rates. Either way, we are seeing the limits of what central banks can actually accomplish.