Arab Today, arab today turkish economy minister not surprised by fed decision
Last Updated : GMT 12:34:44
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Turkish economy minister not surprised by Fed decision

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Arab Today, arab today Turkish economy minister not surprised by Fed decision

Istanbul - Anadolu

Turkish Economy Minister Zafer Caglayan said on Thursday that he was not surprised by the Wednesday decision of Federal Reserve (Fed) of the United States to continue buying bonds in a bid to keep interest rates down. Caglayan delivered a speech at the 4th Istanbul Finance Summit (IFS) held at Istanbul\'s Ceylan Intercontinental Hotel, officially sponsored by Anadolu Agency (AA), under the theme of \"Financing Sustained Growth.\" Speaking to the press after his speech Caglayan remarked on the announcement of the US\' Fed which cut its economic growth forecasts and said it would keep buying bonds to ensure the decrease in interest rates. Caglayan noted that the Fed would sooner or later retract the money it had put on the market. Turkish minister stated that the US\'s Fed was already expected to suspend quantitative easing one or the other day, saying that\" It is not surprising, but the reactions are exaggerated and of extreme sensitivity.\" \"At the end, the markets will naturally reach a balance in somewhere at some level between the vendors and purchasers,\" he noted. He underscored that the world econmy was in seek of balance within itself. Caglayan also argued that Fed Chairman Bernarke would have acted in that way probably for \"he did not want to be the bad guy ahead of leaving his post as the Chairman.\" As for the impact of the Fed decision on Turkish economy, Caglayan said Turkey had an economy that was already intergrated to the global economy. Caglayan stated that \"Turkish lira might lose some value, naturally,\" as to name a probable negative impact of the decision. He highlighted that the decision might lead to a fall in the competitiveness of the Turkish exports as a disadvantage. Asked of the worry and fear over currency wars upon the decision, Turkish economy minister said the currency wars always existed. Caglayan concluded that what was important from now on was the course of the expectations for the markets. Fed Chairman Ben Bernanke and his fellow policymakers, after taking a harder look at the most recent information, decided on Wednesday not to change course after all, as to keep on buying bonds to keep interest rates down. The Fed said it would not back off its strategy of buying $85 billion a month in bonds to push down on long-term interest rates, with the ongoing probability of decreasing those purchases by year\'s end if the policymakers think conditions have changed, but for now, the low-rate strategy is firmly in place. \"The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market,\" the Fed officials said in its Wednesday statement. FED\'s decision a potential threat: Turkish Energy Minister Turkish Energy Minister Taner Yildiz said on Thursday that the decision of the Federal Reserve (FED) would continue to pose a potential threat to economies which have high amounts of foreign capital. Yildiz attended an event in Ankara to promote his constitutuent, the province of Kayseri. Referring to the FED\'s decision about stimulus program, Yildiz said, \"I think that this is a temporary situation\" adding that this was posing a potential threat to the countries that receive heavy foreign capital so Turkey should increase its own capital. Yildiz stressed that drop of USD against Turkish lira is an important development in regards to Turkey\'s energy costs. On crude oil prices, Yildiz reminded the per barrel price was around $111; and said that he still expected further drop from those levels. Yildiz added that he welcomed the current exchange rate of 1.95 TRY/USD compared to last week\'s rate of 2.05 TRY/USD.

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