Wednesday, March 9, 2011
As I mentioned before, one of my favorite movies in the great movie year of 2009 was 500 Days of Summer, and my favorite scene in the movie is the Expectations versus Reality scene, with the Regina Spektor song reflecting the protagonist's mood quite well.
I couldn't help but think that scene when I read, in the IMF's daily press summary email, CBT MPC member Turalay Kenc saying that inflation targets were well anchored and in line with the central bank's medium term inflation target (of 5.5 percent). See for yourself is that is the case:
In particular, I really liken the CBT to Tom, as they are, like him, seeing things as they want to see them: They are saying $8-10 billion of short-term hot money has left Turkey, but then they do not provide any evidence (if you have Turkey Data Monitor, Murat Ucer summarizes this issue there as well). They say credit is slowing down, although there are no such signs. They say there is still a large output gap, but all evidence points to the contrary.
And I am getting more and more convinced every day that the CBT will share Tom's fate, in the sense that the Bank's unconventional policy experiment will end in tears. I just don't know what song will be playing in the background when the tears start flowing.
BTW, this is one of the topics I am considering for this week's column. I'll have another "column ideas" post in the next couple of days...