Ankara insider: “Without Stabilizing the Lira, Reducing Inflation is a Fantasy”

This is  a summary of the article penned by veteran Ankara correspondent Mr Erdal Saglam, who covers policy:

In a recent column published by Sözcü, financial journalist Erdal Sağlam argues that lowering inflation in Türkiye without first stabilizing the Turkish lira is unrealistic. Despite aggressive interest rate hikes by the Central Bank of the Republic of Türkiye (CBRT), exchange rates remain under pressure. Since March 19, foreign currency demand has intensified, indicating a lack of confidence in monetary policy and economic direction.

Sağlam notes that the Central Bank’s net reserves are dwindling again after briefly recovering, making the lira increasingly vulnerable. Additionally, public communication and coordination among policymakers remain weak, which further fuels uncertainty.

The article stresses that without structural reforms and credible political-economic signals, temporary monetary tools like interest rate hikes won’t be enough to curb inflation sustainably. The rise in the U.S. dollar exchange rate continues to drive cost-push inflation, affecting food, housing, and energy prices in particular.

Sağlam warns that if the government fails to regain control over exchange rates and does not restore economic credibility, the inflation spiral could persist well into 2025. He emphasizes that market players, businesses, and citizens need reassurance—something not provided by sporadic measures or vague economic roadmaps.