US banking giant releases inflation and interest rate forecast for Turkey

In assessments regarding the Turkish economy, forecasts from international institutions continue to stand out as a significant indicator. Most recently, JPMorgan has raised its projections, pointing out that the increase in energy costs in Turkey has significantly impacted inflation and interest rate expectations.

According to data released in March, annual inflation in Turkey was recorded at 30.87 percent. However, the upward movement in global energy prices has led to changes in year-end forecasts. The year-end inflation projection, previously set at 26.4 percent, has been raised to 28 percent. The report highlights expectations for price hikes in energy, particularly electricity and natural gas, emphasizing that annual inflation in these sectors could reach 39 percent.

The bank also updated its expectation regarding the Central Bank of the Republic of Turkey's (TCMB) policy rate. It was estimated that the policy rate would be at 34 percent instead of 32 percent by the end of the year. In the short term, it was stated that the TCMB is expected to raise the policy rate from 37 percent to 40 percent at the Monetary Policy Committee meeting to be held on April 22. The possibility of the overnight lending rate rising to 43 percent was also highlighted.

According to JPMorgan's assessments, the interest rate cut process could begin in July, and it is projected that the policy rate could be cut three times by 100 basis points each by the end of the year. However, it is stated that if energy prices maintain their high levels, the Central Bank's determination in monetary tightening will also continue.

While rising energy costs are expected to continue increasing inflationary pressures in the coming months, it was assessed that this situation could lead to interest rates remaining high in Turkey for a long period.

News Source: 12punto