We expect the CBRT to keep the interest rate unchanged at 19% at the MPC meeting to be held tomorrow. Whereas; We will be looking at this meeting of the Central Bank on a policy guidance basis. We think that it would be beneficial for the Central Bank to include a reference in the form of “additional tightening” in its policy statement against the deteriorating trend of inflation, the de-dollarization process that could not be achieved and the monetary risks originating primarily from the Fed, and to consider a rate hike as an option in the following months.
The latest inflation surprise variables have ruled out the possibility of a rate cut in a time period such as July or August. We expect the inflation, which was 17.5% in June above the expectations, to go higher in the following months due to the spillover effect of energy price hikes. We think that the degree of tightness has decreased as the difference between policy rate and inflation shrank to 150 basis points. Inflation effect not yet reflected from PPI, weak TRY and high global oil prices continue to pose upside risks for inflation.
The Fed is likely to communicate about policy tightening in the coming months. Some emerging country central banks are preparing themselves for this cycle. Central banks such as Brazil, Mexico and Russia have raised interest rates, and the Central Bank of Chile, which has a meeting on the same day as us, is expected to raise interest rates as well. The tightness of monetary policies, and accordingly the real interest position, which shows the difference between inflation and policy rate, can be an investment criterion for emerging countries in the tapering period, and if the effect of tapering on financial markets is deeper than expected, it will become even more important. The CBRT should maintain a policy structure that also references additional tightening and make a risk assessment against inflation risks. The fact that the lira’s erosion against the dollar is not limited to inflation requires a tighter return position in terms of de-dollarization. We do not think that the CBRT has a concept such as interest rate cuts in this inflationary environment, while risks regarding external capital movements are also on the agenda.
When we look at the effects on market-based inflation expectations, we see that energy hikes and main inflation indicators add more than 1 point to the structure. Inflation is likely to fall slightly at the end of the year, if any price shock does not take over the expected base effect in the last few months of the year, a year-end realization of close to 16% may be possible. The interest created by the Central Bank above inflation and the reasonable real interest requirement leave a very tight area in theory. Even if there is a rate cut, it will remain on a limited scale. It seems that this possibility cannot be addressed before the 4Q21 period. Of course, it will be necessary to take into account the possibilities created by the current conditions of that period. In fact, the Central Bank should not consider reducing interest rates before a reliable downward environment occurs supported by main indicators.
“Burada yer alan yatırım bilgi, yorum ve tavsiyeleri yatırım danışmanlığı kapsamında değildir. Yatırım danışmanlığı hizmeti, yetkili kuruluşlar tarafından kişilerin risk ve getiri tercihleri dikkate alınarak kişiye özel sunulmaktadır. Burada yer alan yorum ve tavsiyeler ise genel niteliktedir. Bu tavsiyeler mali durumunuz ile risk ve getiri tercihlerinize uygun olmayabilir. Bu nedenle, sadece burada yer alan bilgilere dayanılarak yatırım kararı verilmesi beklentilerinize uygun sonuçlar doğurmayabilir.”
KaynakTera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı