Opposition rebuffs Central Bank's letter

A high-ranking official of the main opposition Republican People’s Party (CHP) rebuffed the Turkish Central Bank’s explanation on Turkey’s failure to achieve the bank’s inflation target last year in a letter to the government, saying the bank maintained its approach on blaming the failure on external factors.

The bank’s letter attributed the reason of the real 2011 inflation – which amounted to double the target inflation, hit the record in the current statistics serial and ranked as the highest rate in G-20 countries – to the exchange rate, special consumption tax and food prices, Faik Öztrak, vice president of the CHP, said in a press release.

“Yet in May 2011 the Central Bank said the effect of the exchange rate on inflation had waned and monetary policy had become more effective, but now the bank attributes almost half of the 10.5 percent inflation in 2011 to the hike in the exchange rate and the rest to the hikes in the special consumption tax on tobacco and unprocessed food, thus saying ‘it is not my fault.’”

The inflation target for 2012, which was declared by the Central Bank and the government together as 5.2 percent, was revised to 6.5 percent by the Central Bank in just three months, Öztrak noted.

“So all the predictions and the balances set in the public and private sectors for 2012 have been abated just in the beginning of the year,” he said.

“The 2012 inflation target could be achieved only if the hot money inflow occurred, the Central Bank said. In other words, the inflation target is entrusted to the risk appetite of the hot money managers,” he said, adding that it was rightful to ask why the policy makers kept occupying their posts if the fate of the inflation rate was tied to hot money inflow.