This week, we closely followed the interest rate decisions and statements of two major central banks on the global front. The Federal Reserve (Fed) made the expected move in its interest rate decision but surprised with its projections. On the other hand, the European Central Bank (ECB) made a decision in line with expectations.

On Wednesday evening, the Fed kept its policy rate unchanged, as it had prepared the ground with verbal guidance for some time. However, it raised its final interest rate forecast from 5.1% to 5.6%, signaling two 25 basis point rate hikes by the end of the year.

During the press conference following the decision, Fed Chairman Powell stated that most Fed members see further interest rate hikes as appropriate, saying, "Additional rate increases may be suitable this year."

Referring to the decline in headline inflation, Powell mentioned, "Inflation has slowed down somewhat, but inflationary pressures continue to remain high," and added, "We don't see much progress in the Core Personal Consumption Expenditures Index (PCE)," highlighting that the key data followed by the Fed has not yet consistently come down. We know that this data is more important for the Fed than headline inflation. The Core PCE, which was 4.4% in January, stood at 4.7% in May.

Another decision we closely monitored came from the ECB on Thursday. As expected, the ECB raised interest rates by 25 basis points. Additionally, the message was given that interest rate hikes are not yet over. Speaking at the press conference after the decision, ECB President Lagarde expressed uncertainties in inflation and used the phrase "A rate hike in July is highly likely."

Furthermore, the ECB updated its inflation forecasts for 2023. With the latest update, the year-end forecast was revised from 5.3% to 5.4%. Moreover, the forecast for core inflation was raised from 4.6% to 5.1%. With these developments, Lagarde stated, "We are not considering halting interest rate hikes."

After witnessing the developments from two major central banks, all eyes are now turned to the Monetary Policy Committee (MPC) meeting of the Central Bank of the Republic of Türkiye scheduled for June 22. However, currently, no one has the slightest idea of what will happen at the MPC meeting. As I mentioned in my previous article, we have not seen any written or verbal guidance from the Central Bank so far. It is worth emphasizing that this uncertainty has left the business world, banks, markets, and even individual savers in a state of curiosity.

From the interview President Erdogan gave to journalists upon his return from Azerbaijan, it appears that there is a certain room for the new Central Bank management to utilize all policy tools. However, we have yet to see any verbal guidance regarding the method and rate of these policy tools in the opened space. It would have been beneficial if the new Central Bank Governor, Hafize Gaye Erkan, had held a meeting in Ankara, perhaps at the Chamber of Industry or Chamber of Commerce, before the MPC meeting. In such a gathering, she could have provided verbal guidance and benefited from the evaluations of businesspeople who bear the real burden of the economy, not just the financial markets.