We think that the inflation risks that have increased recently have weighted the factors that will form the basis for the Central Bank's interest rate hike. We are entering a period in which inflation risks increase with the effect of global commodity and oil prices, as well as the potential of volatility and depreciation in the lira to trigger additional inflation risks. While currency risks seem to be manageable domestically to a certain point, it seems that even if this effect is eliminated, we will import a global inflation from oil prices. The ongoing course of the PPI and the monthly increases above the CPI reveal that the cost burden on the producer continues and there are suspended price increases. Inflation carries the risk of deviating from target levels, together with past effects and current effects.
It is observed that global interest rates also tend to increase and put pressure on the lira just like other emerging countries' currencies. During this period, the lira's reaction range was wider than the currencies of other emerging countries, and there was an extreme value change. While this degree of volatility in exchange rates poses a risk to price predictability and stability, it also constitutes the main lines of stickiness in inflation. The lira must be in a direction that gains value gradually and fit on a band.
The inflation, which reached the level of 15.6% in February and we think that the CB will converge to the current policy rate in the following months with additional increases, also weaken the real interest position. Financial markets are weighing on the expectation of an interest rate hike. Within the framework of our increasing proactivity expectation from the Central Bank under the current conditions; we expect an interest rate hike of 100 basis points and the policy rate to be increased to 18% at this MPC meeting.
In the disinflation process, which should gain weight in the second half of the year, we expect it to adopt a cautious approach towards loosening by evaluating factors such as credit expansion, current account deficit inflation expectations and price stability together.
Kaynak Enver Erkan / Tera Yatırım
Hibya Haber Ajansı