Turkey’s Inflation Stopped Being a Problem — It Became a Habit
Alkin’s framing matters because it shifts the diagnosis. If inflation were simply a supply shock or a policy misstep, raising interest rates and tightening credit would fix it. But when inflation becomes behavior — when shopkeepers automatically mark up prices in anticipation of future costs, when employees demand raises before inflation arrives, when landlords build 40% increases into every new lease — the disease has moved from the economy’s bloodstream into its DNA.
This is the structural trap Turkey has been unable to escape for years. The Central Bank can set rates, the Treasury can manage borrowing, but no policy tool directly rewires human expectations built over decades of price instability. Breaking an inflationary mindset requires a sustained period of credibility, consistency, and calm — three things Turkish monetary history has rarely delivered long enough to stick.
💬 Levent KAYIRA Commentary
Ekonomik Gündem Analysis: I spent 15 years inside Turkish banking watching this exact behavioral loop play out at the desk level. Corporate clients would borrow not because their business needed expansion capital, but because they expected any asset — inventory, real estate, machinery — to be worth more next quarter simply due to inflation. That is not investing. That is inflation arbitrage, and it became the default business model for a generation of Turkish entrepreneurs.
Alkin is pointing at something central bankers rarely say out loud: the real benchmark rate right now is not 42% — it’s the inflation expectation baked into every contract signed today. When a small manufacturer in Bursa prices a six-month supply deal, they’re not looking at TURKSTAT data. They’re looking at what happened last year and adding a buffer. That buffer IS inflation perpetuating itself.
For investors, the implication is serious. Equity valuations, bond yields, and currency hedging costs all carry an embedded behavioral premium that won’t compress just because the policy rate holds steady. Until wage-price spiral expectations break — likely requiring 18-24 months of sustained single-digit inflation — Turkish assets will keep pricing in the worst. Position accordingly.
Kaynak: Google News Ekonomi