Turkey’s March inflation figures will be released on Friday and our inflation forecast is 0.9% on a monthly basis, which will cause an increase of 12.2% on an annual basis. We are faced with an inflation outlook that reacts to 12% in the first months of the year after the low demand effect which came from the weakness of economy and the exchange rate taken into control. The coronavirus pandemic effect, low demand, low oil price and rising exchange rate make inflation an equation with multiple variables
We may see the effect of the factors we mentioned in March slightly, but the inflation outlook for April and beyond will include the mixed effect of the variables we have specified. Due to the stagnation that will occur in the economy, we have to include the low demand effect in the inflation assumptions, although the inflation will not be on an uptrend at this point, the Central Bank will continue its willingness for further easing. In the current pathway, an “interest rate cut + QE” status can be defined for the CBRT. Of course, the side effect of this policy is the increase in exchange rate and the cost effect from the increase in exchange rate obscures the inflation outlook.
Source: Tera Menkul
Hibya News Agency