CBRT Raises Its Inflation Expectations

The Central Bank of the Republic of Turkey shared the Expectation Survey, which includes market expectations.

CBRT raises its inflation expectations. In the Expectations Survey for March, organized by the Central Bank of the Republic of Turkey, an increase in year-end inflation expectations was realized. According to the said survey, year-end consumer inflation (CPI) expectation was at 11.23 percent in the previous survey period, and rose to 11.54 percent in this survey period. 12 and 24 months ahead CPI expectations also increased. Accordingly, the 12-month ahead CPI expectation was announced as 10.47 percent in this survey period. In the previous survey, this expectation was announced as 10.36 percent. The 24-month ahead CPI expectation was determined as 9.18 percent in the March survey. In the February survey, the CPI expectation for the next 24 months was recorded as 9.03 percent.   Increase in Interest Expectations In the survey for March, it was seen that the market's expectations for interest rates also increased. According to this survey, the current month-end overnight interest rate expectation in the BIST Repo and Reverse-Repo Market was 17.04 percent in the previous survey period, while it was recorded as 17.56 percent in this survey period. Weighted Average Funding Cost Expectation for the end of the current month was 17 percent in the previous survey period, and rose to 17.53 percent in this survey period. The Central Bank's one-week repo auction interest rate, on the other hand, increased from 17 percent to 17.59 percent in the current month.   A Rise in Exchange Rate is Expected In the survey, which included inflation and interest indicators as well as expectations for the exchange rate, it was observed that the expectations in the exchange rate were up. Accordingly, the year-end USD/TL exchange rate expectation rose from 7.79 to 7.95. The USD/TL rate expectation, which was 7.94 in the February survey, reached 8.20 percent in the last survey.   Growth Forecast for This Year Increased While international organizations increased their 2021 growth expectations for Turkey, a similar approach was seen in the Expectation Survey. According to this survey, the growth expectation for 2021 was announced as 4.1 percent in the previous survey period, while it was determined as 4.4 percent in this survey period. The growth expectation for 2022 was 4.3 percent in the previous survey period, but fell to 4.2 percent in this survey period.