Rising inflation should be under focus, not rates: Bank chair

ISTANBUL

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İş Bank Chairman Ersin Özince has said the main concern for the Turkish economy should be rising inflation rates - not interest rates. 

“We should be focusing on the rise in the consumer price index rather than the expected rate hike by the U.S. Federal Reserve [Fed] … Everyone in Turkey should be asking why one kilogram of tomato now costs five liras,” Özince said in an interview with daily newspaper Sözcü. 

After being asked when he expected the Fed to hike rates, he said that he “does not care.” 

“Many people have recently been concerned about the expected rise in the Fed’s rates. As the chairman of İş Bank and a person who knows the Treasury very well, I can say that my top concern is not the Fed’s expected move,” Özince said. 

“Everybody already knows that the last decade’s high liquidity party is over. If Turkey takes the right steps, it will be able to find the foreign funds that it needs, although it may cost a bit higher. However, the rates will not increase any more than tomato’s price. I think that everybody should be wary about the rise in the tomato’s cost - the rise in the inflation rates,” he added. 

He noted that the rise in the food prices is now around 14 percent and said it is the main stimulator behind the rise in the consumer price index. 

Özince described the rise in the inflation rate as a “big problem” and if it continues to rise dramatically then economic instability would be the result. 

Meanwhile, consumer price inflation in Turkey rose more than expected in April, according to official data released by the Turkish Statistical Institute (TÜİK) on May 4. 

The Consumer Price Index rose 1.63 percent from March, pushing the annual rate of inflation to 7.91 percent in April from 7.61 in March, according to a statement from the TÜİK. 

The highest annual increase was 14.36 percent in food and non-alcoholic beverages, followed by hotels, cafes and restaurants with 13.34 percent. 

In its April 30 report, the Central Bank made a revision to its year-end inflation forecast to 6.8 percent, from 5.5 percent.