Inflation and MPC: Back to Square One

TURKEY - Report 03 Feb 2015 by Murat Ucer

January CPI inflation came in at 1.1%, which is higher than both consensus (0.7%) and our slightly higher forecast (0.8%). Most importantly, today’s print proved the overly optimistic expectations by Governor Basci unwarranted and, as announced by the Bank in the aftermath of the release, it ruled out an extraordinary meeting tomorrow. Twelve-month CPI inflation nevertheless declined significantly to 7.2% from 8.2% a month earlier, thanks to lower oil prices and favorable base effects from last January. Twelve-month PPI inflation, which captures the cost-side of the equation closely, also d...

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