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Inflation Forces Head Of Turkish Central Bank To Move Back In With Her Parents

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by blueapples
Sunday, Dec 17, 2023 - 4:24

With inflation making the focus of the American electorate going into an election year, calls for the heads of central bankers reverberate from the nation's political discourse now more than ever. While the central bankers of the Federal Reserve have rightfully been cast into a villainous light for their excessive avarice, the new head of Turkey's central bank is far from the Palatine Hill her American counterparts look down on the masses from. Due to even more rampant inflation Governor of the Central Bank of Turkey Hafize Gaye Erkan has been forced to move back in with her parents.

Erkan in what I am assuming is not her home office.

The 44-year-old Erkan took up her post in June following two decades in the United States where she honed her career trajectory at some of the world's most reviled --- err, renowned -- financial firms. Erkan previously worked at the likes of Goldman Sachs and First Republic Bank. Upon returning to her homeland, she now finds herself on the other side of the economic upheaval enveloping markers across the world.

Based on the most recent available economic data, YoY inflation in Turkey for November stood at 61%. As disastrous as that metric is, there's not much of a light at the end of the tunnel for Turks with economics forecasting inflation to rise as much as 75% YoY by May 2024. This downward spiral has ushered in a series of rate hikes, the latest of which saw the Turkish Central Bank increase its main interest rate to 40% in November following a previous 35% rate hike made in October.

Despite this effort to tame in inflation, even Erkan can't seem to escape the rising costs that have drastically diminished the quality of life for her Turkish compatriots. "Is it possible that Istanbul has gotten more expensive than Manhattan?" she said, opining about the major reality shock she's faced since moving back to her homeland from New York. The revelation that she and her husband felt they had no choice but to move back in with her parents was made to prominent Turkish newspaper Hurriyet in which she expounded upon seeing the economic reality averages Turks face for herself, stating "We haven't found a home in Istanbul. It's terribly expensive. We've moved in with my parents,"

The untenable housing market in Istanbul comes after the Turkish Central bank decided to implement a price cap limiting rent increases to a maximum of 25% until July 2024. Before initially going into effect in May 2022, rental prices in Turkey had risen 101% YoY compared to 2021. That price control does little to convey the reality of housing in Turkey. Soaring costs have driven property prices sky high for homeowners and landlords. Eviction cases have risen by 47% in the country the last two years. According to the Turkish Statistical Institute, housing sales in June 2023 dropped by 44.4% compared to 2022. That decline is due to a rising property costs that have seen housing prices rise 16.5% in Istanbul from January to May 2023 alone.

During the announcement of the Turkish Central Bank's most recent rate hike Erkan stated "The pace of monetary tightening will slow down and the tightening cycle will be completed in a short period of time." As optimistic as she sounded when she made that declaration, her decision to move back home with her parents despite being employed as one of the nation's most powerful bureaucrats is enough to cast an ominous shadow on the odds that wishful thinking becomes a reality. 

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