Evaluation of the inflation report of foreign banks

Evaluation of the inflation report of foreign banks

Evaluation of the inflation report of foreign banks

Following the presentation of the inflation report by CBRT Chairman Hafize Gaye Erkan, foreign investment banks published their analyzes of the presentation.

Erkan’s inflation messages and CBRT interest rate forecasts were included in the analyzes published by Morgan Stanley and Citibank.

In the last inflation report of the year, inflation forecasts were raised from 58 percent to 65 percent by the end of 2023 and from 33 percent to 36 percent by the end of 2024. The forecast for the end of 2025 was lowered from 15 percent to 14 percent.

Erkan had said they expected inflation to peak at 70-75 percent in May next year, and expected a rapid fall from the peak after May.

Erkan also said: “Aware that it will be a long and difficult process to control inflation, which has been high and volatile for some time, we will continue to use all our tools with determination until a significant improvement in the inflation outlook is achieved.”


In their analysis of the presentation of the Erkan Inflation Report on November 2, foreign investment banks emphasized the determination that “the adjustment will continue until a permanent and significant decline in inflation is achieved.”

In the assessment of Turkey in the weekly report of the US-based investment bank Morgan Stanley for CEEMEA countries, it is recalled that the latest CBRT inflation report was announced in Ankara on November 2 and that is in line with the latest decision texts of the Monetary Policy Committee (PPK), it was highlighted that the communication made showed a strong focus on inflation.

The report states that Erkan noted that “tightening measures will continue until a significant improvement in inflation is achieved,” but did not provide any specific guidance on the level of political interest.

The CBRT’s update of its inflation forecast for the end of 2023 basically reflects the increases in inflation since July and, more importantly, the CBRT revised its inflation forecast for the end of 2024 to 36 percent with the influence of factors external factors such as oil prices and upward revisions in administered rates. prices The recorded report included the following evaluations:

“Forecasts on the production gap have pointed to a significant slowdown in growth from the second half of 2024. CBRT noted that the effects of the accumulated adjustment measures have begun to be seen and the first signs of a slowdown in domestic demand with a decrease in the monthly inflation trend. On the other hand, the CBRT highlighted that it has not yet seen a significant improvement in the inflation outlook and pointed to further adjustment in this context. On the question of “whether the CBRT aims to achieve a positive real policy interest rate”, Mr. President Erkan stated that “the CBRT examines all the determinants of inflation on a monthly basis to decide policy measures, instead of focusing only on the real factors”. Interest rates’.

We maintain our estimate that there will be a 250 basis point increase in the policy rate in November and that the final policy rate level of 40 percent will be reached in April 2024. “Depending on the inflation outlook, there is the possibility of the official interest rate reaching 40 percent sooner.


The report by American multinational investment bank and financial services company Citibank states that the CBRT increased inflation forecasts for the end of 2023 and 2024 to 65 percent and 36 percent, respectively, and the revised inflation forecast for the end The year 2023 was generally in line with market expectations (68 percent), and it was highlighted that the upper limit of the trajectory forecast for 2024 more realistically represents the possible inflation trend.

The report noted the following:

“Among the issues highlighted by President Erkan, ‘disinflation, which will begin in the second half of 2024, will be supported by rising interest rates on TL-denominated assets, balancing domestic demand and anchoring inflation expectations; tightening will continue until a permanent and significant decline in inflation is achieved, CBRT statement of July 21 “It is important that it has withdrawn more than 1 trillion TL of liquidity from the market with the required reserve decisions taken between on November 2 and 2, and that although there is “No specific timetable for exiting the Protected Exchange Rate Deposit (KKM) program, the attractiveness of TL-denominated assets will continue to increase.” (AA)

Source: Sozcu


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