Economist Hanke responds to US bank: I disagree with the Turkey forecast

US-based financial services firm Wells Fargo has announced its year-end dollar exchange rate forecast as 32.5 and its inflation forecast in the 55-60 percent range. 

The Central Bank of the Republic of Turkey (TCMB) has a year-end inflation forecast in the 38-42 percent range. The year-end inflation expectations of other financial institutions and banks are also in line with the Central Bank.

However, Wells Fargo FX Strategist Brendan McKenna has gone beyond the inflation expectations of other foreign institutions with the 55-60 percent levels he projected for the year-end.

INFLATION FORECAST AROUND 55-60 PERCENT FOR YEAR-END

Steve Hanke, Professor of Applied Economics at Johns Hopkins University, spoke about Wells Fargo's year-end inflation and dollar expectations.

Responding to questions from CNBC-e, Hanke said, "I think Wells Fargo's 32.5 TL forecast is on the strong side. While I believe the TL will close the year strongly, I do not think the appreciation will be as strong as the 32.5 TL level implied by Wells Fargo."

Regarding the inflation forecast expected by US-based Wells Fargo for Turkey, which is positioned around 55 to 60 percent for the end of 2024, Hanke said, "As for inflation, with high-frequency data, I currently measure Turkey's inflation at 25.6 percent annually, which is much lower than the official rate of 71.6 percent annually." 

Hanke explained his reasoning as follows: "The large gap between my measurement and the official measurement is actually significant because the official inflation rate tends to follow my high-frequency measurement. I predict that inflation in Turkey by the end of the year will remain below Wells Fargo's 55 percent estimate."

News Source: 12punto