Central Bank announces: Increase in interest rate and inflation expectations!

The Central Bank of the Republic of Türkiye (CBRT) has shared its October 2023 survey of market participants. According to the results of the survey, which was answered by 70 participants consisting of representatives from the real and financial sectors, the participants' current year-end consumer inflation (CPI) expectation was 68.01 percent in this survey period, compared to 67.22 percent in the previous survey period.

The 12-month ahead CPI expectation was 45.28 percent in this survey period, compared to 44.94 percent in the previous survey period. The 24-month ahead CPI expectation was 25.82 percent and 23.87 percent in the same survey periods, respectively.

In the October 2023 survey period, when the participants' probability estimates for 12 months ahead were evaluated, it was projected that the CPI would increase on average by 14.77 percent probability in the 37.00 - 42.99 percent range, by 56.03 percent probability in the 43.00 - 48.99 percent range, and by 18.7 percent probability in the 49.00 - 54.99 percent range.

According to the evaluation based on point estimates in the same survey period, it was observed that 18.46 percent of the participants' expectations were in the 37.00 - 42.99 percent range, 56.92 percent of their expectations were in the 43.00 - 48.99 percent range, and 15.38 percent of their expectations were in the 49.00 - 54.99 percent range.

24-MONTH AHEAD INFLATION FORECAST

In the October 2023 survey period, when the participants' probability estimates for 24 months ahead were evaluated, it was projected that the CPI would increase on average by 41.66 percent probability in the 19.00 - 24.99 percent range, by 30.31 percent probability in the 25.00 - 30.99 percent range, and by 16.52 percent probability in the 31.00 - 36.99 percent range.

In the same survey period, when the 24-month ahead CPI inflation expectations were evaluated based on point estimates, it was observed that 33.87 percent of the participants' expectations were in the 19.00 - 24.99 percent range, 35.48 percent of their expectations were in the 25.00 - 30.99 percent range, and 17.74 percent of their expectations were in the 31.00 - 36.99 percent range.

INTEREST RATE EXPECTATIONS

The participants' expectation for the overnight interest rate in the BIST Repo and Reverse-Repo Market at the end of the current month was 33.22 percent in this survey period, compared to 29.26 percent in the previous survey period. The expectation for the CBRT one-week repo auction interest rate at the end of the current month was 33.68 percent in this survey period, compared to 30.00 percent in the previous survey period.

EXCHANGE RATE FORECAST

The participants' current year-end exchange rate (dollar/TL) expectation was 30.05 TL in this survey period, compared to 30.14 TL in the previous survey period. The 12-month ahead exchange rate expectation was 38.64 TL in this survey period, compared to 37.26 TL in the previous survey period.

GDP GROWTH EXPECTATIONS

The participants' GDP 2023 growth expectation was 4.1 percent in this survey period, compared to 3.9 percent in the previous survey period. The GDP 2024 growth expectation was 3.4 percent in this survey period, compared to 3.8 percent in the previous survey period.

News Source: 12punto