prime minister now brings remoting, will daily be the business partners of many see egos and visions. i'm seeing there is an invalid. welcome to our program. for the 1st time and almost 2 and a half years, turkey central bank has raised interest rates to 15 percent from just under 9. it's a shift away from the unorthodox policies are present, rest of type air, the one who has champion low rates. despite the turkish layers, rapids about the valuation, the country's currency was, have had serious consequences for normal turks. as their correspondent, julia hun reports. there is almost nothing you can find here in the immuno. the neighborhood is one of the symbols oldest and busy a small cuz the area, and it's seen as a bell with a for the child cuz she called to me. right now it seems, need a shop luminous new customers. i thought the smaller sales have dropped by 50 percent. the price increases every day and the exchange rate fluctuates. the,

this is giving us a hard time custom us, we used to buy a keel, only know buying house, aquino, or even less. is it a good one? what do you face to activate my expectation is that the economy will improve that inflation loops up here, but i don't think it will the auto group. i just hope it won't get even worse to accept that we have been struggling with this crisis for a long time and we've been very patient. it's time for things to get better. since president ridge of telling you about 11 re election in may, the value of the talk is 0 has tumbled to lose. and inflation is officially me a 40 percent leading many unable to afford even basic food stuff. analysts say president ad ones and also talks economic policies have made things worse, especially his insistence on low interest rates when inflation is running high. now he's a wanted a new economic team to overcome the crisis fees ago. yeah. our con,

a former will street executive is turkeys, new central bank, up in a new finance minister may mich, him check. and internationally, renowned economist has pledged to return to rational policies, use it to find information that the security expert like olds on chicago, or however, remain cautious. even if the new team were to convince ardon of a policy shift, he says, talk, he's economy wouldn't just switch, play, recover lost between those 2 camps. the problem is that all right, going on, it has been through radio so much in the last few years that are not easy or quick fix this 3. it will take many years to fix and what they, what do you do? it will be very painful. if you have to increase interest rates to lower inflation, we will be faced with a huge risk of very high unemployment survey this the public and the president will

actually have the patients to see through this thrust formation. yep. and it remains yet to be see here at the mall kitchen and the news. no one wants to hear about more economic panes. people want prices to go down and the economy to heal. so things might get more difficult before they can get better. and then use now confirming that monetary policy shift to countess sky high inflation here into a key that has left so many people struggling to get by the key interest rate was heights to 15 percent. maybe not to the degree. some analysts had expected, but it seems more increases all on the horizon, and that is why many economists here in the country see this as a 1st step in the right direction. finally, signaling

a return towards more conventional conventional economic policies. timothy ash is an economist at blue bay asset management in london, and he's an associate fellow, a chatham house. 10, thanks for joining us. rates looked at the 15 percent. i think you were expecting a lot more weren't you at how do you look at this? what, what's happened? well, he places 40 percent, so 50 percent policy rights means negative 25 percent real rates hops. the coupling flows with, with such large negative real rates taking how's the balance of payments? problem, lots content that's it needs to close the how does it close it? you know, if it's not really high rates, it's got to let the count see a just an attrition check is just that's the finance ministers just come out just now saying that he thinks the ethics regime will attract effects in flows or capital inflows. i should say a suggest they're going to let the exchange rate relative to the interest rates do the heavy lifting, incentive, closing the trade and current account deficit? do you consider this a turnaround for turkey?

is monetary policy in any degree, or is this sort of a slow difference of the water as well? i mean it until in the route to elections. they managed the exchange rate. they tried to keep as a no been line. okay. um, at least it in a couple of months or 6 months as a leading up selection price have up had lots of the valuation because of ad one's crazy interest rate policies. i think we got now going to see a bit of both. right. we're going to see the currency allowed to adjust and we're going to see some rate hikes to kind of money is the inflation effects of, of thoughts. we could cover this in the past through to inflation from an exchange rate week. this combination of both market probably wants much more pre from loading of, of rate hikes. remember, here is the memory, the publishing check of the new governor a come have is the market. remember as a previous orthodox governor? no, she act ball who high rates and was removed kind of 6 months into into the jump so that i know of us about the novice, the basically you actually, i'm checking that can, may, will also talks policy an organization rights. but actually they want me to jump very long. so that's the real difficulty. if you're

a normal to what does this decision mean for you and these, these several decisions that we've seen so far? well, credit is going to be still how to get. so i think with, with such negative rates, the count see it will, will adjust weak shots and probably means inflation, which is from a high base come as come down a bit. remember it is 80 percent 6 months or so down the line. it's come down to around 40 i think the problem really probably stick around this level of maybe go bits higher until we see some re balancing on the current account helping. i'm because the exchange rate and then maybe we'll see some better news on the inflation from the probably like 6 to 12 months down the line. but also way i wanna make sure that understanding you do not really see this as a complete turnaround by add one, he's also with one calling the shots. as you mentioned, the markets have a memory of what's happening to previous governors. is this much of a, is this sort of a trial balloon and it could always be into way as well. we'll have to see if this is different. as i mentioned, the previous experience was, was not jack bell. he went to all photography height, right? single fired 6 on the thing to the jump, a guy i tend to think that is

a different crew with advises around ad one and they pushing them all off adults agenda and drove the appointments or shoot. check on subject is fine as mr. and kinda as governor, perhaps, you know, i'm hopeful that we'll see this, this move back to some kind of all for the oxy sustaining longer than last time. so, you know, i'm a bit more hopeful, but, you know, unfortunately the track record of ad one is in is intervening and monetary policy. that's the, comes to timothy ash with blue bay asset management in london. thank you. oh, my pleasure. was that interview recorded earlier in the day? let's move on out of some of the other little business tories making headlines. the bank of england has raised its key interest rate from 4 and a half to 5 percent in an effort to battle. the countries stubbornly high inflation is the 13th consecutive break, high bringing borrowing cost to a new 15 year high inflation, u. k. so the 8.7 percent in may, which is among the highest levels of g 7 nations. german exports to countries

outside the european union increased by one percent in may fall in 2 months of declines. your largest economy exporting goods worth more than $59000000000.00. the most important export markets where the us in china will trade with russia continued to decline sharply. panama worst route on record threatens to stream global water supplies as water levels in the panama canal, or at their lowest level of forty's, impose travel restrictions to prevent larger container ships running a ground meeting. many of them will have to carry less cargo indian prime minister and arrange remote. he is in washington for state visit, where he's been inking new industry and defense deals, including one for g, e to build jet engines for the indian military. also on the agenda is a major deal for semi conductor trips and a joint mission with nasa scheduled for next year. the u. s. as in india, as an economic and political counter way to china, bodies and do nationalism remains of concern. however,

for many us part politicians more, he was once banned from entering the us on allegations he supported religious band rights. while he was head of the state, of course, you're right. and we go to actually talk to pandey for more on this actually, tosh. this is modi's 1st state visit to the us. he's meeting with c o's, he's addressing congress. how important is india right now for the us, not just politically, but also economically. it is extremely important stephen. and, and that's because the india has a much as a key or tentative to china as companies look to diversify away from china as part of the china plus x strategy. it for them, india is a political, a stable country. it's offering believes in incentives who come on making india. it's also the fastest growing major economies. so there's a lot for them to be really excited about as far as india is concerned just this week i must said, but that's what i was looking to invest a make a significant investment in india as soon as possible. just today the honda agenda

electric has agreed to join to the manufacture of fi to jet engines in india and all the despite the despite bodies around democratic backsliding in india and to move these watch the challenges and firms investing in india as opposed to say in china were often said to be infrastructure, lack of educated workers, too much bureaucracy, even to what extent are those still the challenges that are facing for an investment? but that's an interesting question, steven. so if you look at the investments that i've come or i've done have been announced in recent times, they've been mostly restricted to the computer and electronic sector. so the likes of apple as folks go on to the high tech industry and this is not the main job creator in india and other industrial manufacturing. it seems like tech's tied food about food and beverages. these companies haven't really been getting as much attention, and that's because of the many of the reasons that you've just mentioned, a lack of interest structure, lack of skin, do a work force and,

and also the fact that there is high tide us in india and, and that's the reason why they haven't really seen that was of interest. having said that, the more the government is investing big time into uh, an infrastructure building, the roads and apple. it's a bit as it caught pace. uh, that could be taken care of. the problem is creating skill level for us because the problem is that problem with the education level and that needs to be type in as quickly as possible. all right, i should contact. thank you. it is a reminder for top business stories. 30 central bank is high interest rates significantly to 15 percent in an effort to rain in the country. scott high inflation to move represents a policy shift for turkish president present type air to one west long resisted higher rates against the judgment. economists as our show for more find as online the w dot com slash business. we're also on youtube, under the deed of the news channel seemed really blend.

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