Citing temporary incidents of “success” as evidence to the anti-inflationary efforts is just not nice.

Do you check the reports and studies the Central Bank (CBT) releases? The vast majority of them are just wonderful. This makes me particularly proud as I used to work at and direct the research unit for a long time. A large group of experts for whom the top universities of Turkey would compete to employ work at the CBT. The Bank achieves this high research quality by prioritizing education. It attracts the best of best young brains who studied in the top universities of Turkey. It sponsors the graduate studies of these bring people and sends them to the best universities of the world. The Bank has been implementing this model for a long time now. In addition, it attracts professionals who got their PhDs from prominent universities of the world. I wish all public institution would adopt this approach of the CBT instead of fillings posts ideologically.

On the other hand, its high quality research standard does not free the CBT from criticism. On the contrary, with the question “why do we witness the recent problems despite the high-quality research capacity of the CBT” in my mind, I cannot help criticizing the Bank despite the fact that there are a lot of economic problems to deal with on our plate. So, here is my criticism: The CBT officials emphasizing that in December 2012 inflation was the lowest of the last four something decades does not match with the Bank’s research quality. Yes, there are trying to demonstrate the importance they attach to the anti-inflationary agenda, but such statements are just not fine. The same point was highlighted also on the latest CBT meeting on Tuesday, broadcasted live, in response to a question whether the anti-inflationary agenda was neglected lately. The question was a good one, indeed asked by a successful economist. As far as the CBT’s response tells us, the Bank definitely continued its fight against inflation, as proven by the forty-something-year lowest inflation rate achieved in December 2012.

To repeat, this is just not nice. An entire year cannot be reduced to a single month. If there is a constant decline in inflation, Decembers can of course be the reference point for the previous year, as was the case in the 2002-2005 period (Figure 1). But if the inflation constantly fluctuates without any downwards trend towards the target, making reference to a single month makes no sense et al, simply because the performance in that month is not maintained (Figure 2).

Citing temporary incidents of “success” as evidence to the anti-inflationary efforts is not nice. Evidently, the anti-inflationary efforts of the CBT were not sufficient. The CBT might have justified reasons (for instance, concentrating more on current account deficit measures). If they do, I wish they defended those rather than say “sure we are fighting against inflation. See the rate in December 2012.” The two figures below must be thought-provoking for those willing to see the real deal.

This commentary was published in Radikal daily on 01.08.2013