The MPC delivers the consensus again

TURKEY - Report 26 Oct 2023 by Murat Ucer

The CBRT/MPC raised the policy rate by another 500 bps today to 35%, in line with the consensus forecast.

As for the content of the statement, the paragraph on inflation presents a mixed – and a broadly agreeable -- picture on the inflation outlook, with “the “pass-through from tax regulations and cost pressures stemming from wages and exchange rates […] largely completed”, but that the “strong course of domestic demand, the stickiness of services inflation, and the deterioration in inflation expectations continue to put upward pressure on inflation”. It also notes that “the underlying trend in monthly inflation is on course to decline” but that “geopolitical developments pose risks to the inflation outlook due to oil prices”.

The Bank still seems to be working with inflation decelerating to 33% (mid-point) by end-2024, which we do not, incidentally, expect to be revised up in the final Inflation Report of the year -- to be released next Thursday. Parenthetically, we also continue to think this forecast is very optimistic, given the highly entrenched nature of inflation dynamics and that analyst forecasts are already beginning to converge to an inflation rate of some 45-50% by end-2024.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.