STORY: U.S. inflation becomes too "sticky" for Fed to bring it down: Turkish analyst
DATELINE: Oct. 18, 2023
LENGTH: 00:01:14
LOCATION: ISTANBUL, Türkiye
CATEGORY: ECONOMY

SHOTLIST:
1. SOUNDBITE 1 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
2. SOUNDBITE 2 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
3. SOUNDBITE 3 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
4. SOUNDBITE 4 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk

STORYLINE:

Murat Tufan, an analyst with Turkish broadcaster Ekoturk, told Xinhua in a recent interview that inflation in the United States has become "sticky" due to many factors and that the Federal Reserve's interest rate policy has been insufficient to bring it down.

SOUNDBITE 1 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
"Jerome Powell's (Federal Reserve Chair) rate hikes have reduced inflation to some extent, but inflation fluctuating around 3.5 and 3.8 percent is not anymore a rate that Fed can manage under its current policies. It has become persistent and rigid."

Tufan said the post-pandemic inflation that has emerged in the U.S. has characteristics not seen in previous periods. He stated that it had become "sticky" and dependent on many external factors.

SOUNDBITE 2 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
"It (U.S. inflation) is both sticky and affected by oil prices... It is sensetive to logistical resources and many other factors."

Tufan also highlighted the negative impact of the ongoing conflict between Israel and Hamas and the risk of it escalating into a much broader front.

SOUNDBITE 3 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
"For about ten days, we have been talking about the war between Israel and Hamas, and there is a risk that it will escalate to a much bigger front. There is such a risk. Therefore, if we see a land operation or another development on Gaza, oil prices will rise above 100 dollars per barrel.
Therefore, it is not possible for central banks to manage these global crises and the issues I have mentioned with interest rates."

According to Tufan, under such conditions and expectations in the international arena, the Fed's two percent inflation target is an "overly optimistic level." He argued that the Fed will either set the target to 3 percent or raise interest rates further contrary to market expectations.

In his view, since the Fed has reserve money, it can make Americans feel the impact of high inflation a little less. However, if the interest rate hikes could reach up to 6 percent, this move could seriously shake global markets and hamper the growth of the global economy.

SOUNDBITE 4 (Turkish): MURAT TUFAN, Analyst with the Turkish broadcaster Ekoturk
"In such a case, we will be discussing hyperinflation and stagflation processes worldwide.
The deepening of the stock market sales will probably cause the welfare level of developing countries like Türkiye or most of the countries in the OECD to fall and cause them to struggle against much greater inflation."

Xinhua News Agency correspondents reporting from Istanbul, Türkiye.
(XHTV)