Inflation, starting from a loaf
Elif follows the price of a loaf of bread backwards through the baker, the mill, the farmer and the currency to explain what inflation is and why it is so hard to stop.
Why the central bank raised rates and your rent went up
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Show notes
Why the central bank raised rates and your rent went up
Interest rates are supposed to cool prices, so why did Elif's rent go up after the last rate rise. She follows one rate decision through one Istanbul apartment building, from the landlord's mortgage to the tenant's lease.
- What an interest rate actually is, in one sentence
- The landlord's loan, and why rate rises reach rent before they reach anything else
- Savers finally winning, and who the savers are
- Why businesses stop hiring when borrowing gets expensive
- The long lag: eighteen months from decision to dinner table
Send Elif the price that confuses you most and she may follow it on a future episode.
Transcript
Welcome back to Why Bread Costs More, I am Elif Demirtaş. This week I want to explain interest rates, and I am going to do it with my own apartment building in Istanbul. Last spring the central bank raised rates to bring inflation down. Three months later, my landlord raised my rent. Those two things are connected, and not in the way you might think. So we follow one rate decision through one building: the landlord's mortgage, which got more expensive first, the tenants, who paid for it next, the retired couple on the fourth floor whose savings finally earn something, and the shop downstairs that stopped hiring. Then we talk about the lag, because the full effect of that decision takes about eighteen months to reach a dinner table. Patience, it turns out, is monetary policy. You are listening on Witspeak Podcasts.
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