In the CBRT September Market Participants Survey, the current year-end inflation expectation was 16.74%. When we look at the short-term inflation expectations; September inflation is expected to be 1.11%, October inflation to 1.65% and November inflation to 0.95%. If inflation increases in line with the expectations in these months, annual inflation in September, October and November will be 19.41%, 18.85% and 17.29%, respectively.
In August, the divergence effect from food prices pushed the headline inflation above the policy rate with 19.25%; We watched the core inflation drop to 16.8%. Climate and environmental conditions, which are added to the basic cost factors, are currently the usual suspects for global inflation. In addition to the effect of this situation, high inflation pressure may be seen in the winter months due to the current conditions in the domestic market and production. This, in turn, may limit the decline in inflation, which is expected to decrease due to the base effect. In addition to the global supply chain, freight costs, climatic conditions, we will carefully monitor the domestic market factors originating from exchange rates and commodities. The degree of policy tightness against inflation is important for financial market stability.
According to the average inflation forecasts for the next 12 and 24 months, inflation is expected to be 12.94% and 10.71%, respectively. Thus, the average of inflation expectations for the next 12 and 24 months became 11.83%.
Interest rate expectations in the Repo and Reverse Repo Market remained at 19% for the end of the month. The market predicts the one-week repo rate, which is also the policy rate of the Central Bank, as 19, 18.02, 14.73 and 12.30% in the current month and 3, 12, and 24-month future expectations, respectively.
Instead of raising interest rates by the Central Bank against inflation and global monetary policy contractions; We think that it is closer to lowering interest rates with its core indicator approach, which aims to support growth and eliminates the effect of uncontrolled items. In this context, we anticipate that early monetary policy easing will be challenging in maintaining macro balances, particularly TRY stability and its reflection on inflation. As we did not expect a rate cut from the Central Bank at the September 23 meeting, expression changes compatible with Mr. Kavcıoğlu’s core inflation approach can be seen. A less hawkish Central Bank image raises the probability of seeing interest rate cuts in 4Q21. We think that the policy rate can be reduced to 17.50% with gradual cuts at the meetings until the end of the year.
We see improvement in growth prospects. It is seen that the 2021 GDP expectation, which was 6% in the previous survey period, increased to 8.2%. The forecast for 2022 was 4.2% growth in the September survey period. Although it is predicted that the economy will grow by 9% this year in the MTP, 5% for 2022 and 5.5% for 2023 and beyond were made for the following years. When the base effect, which is valid this year, is not next year, global growth may slow down within the framework of global supply slowdowns and reflection on production. We think that there will be a growth of more than 8% within the framework of factors such as acceleration in industrial production, domestic and foreign demand phenomena, and access to credit throughout this year, and that the risks regarding the forecast range are on the upside.
Exchange rate expectations were 8.92 for the end of 2021. We see that the exchange rate expectations for the next 12 months are 9.56.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı