Goldman's inflation assessment: Emphasis on food prices
Goldman Sachs economists Clemens Grafe and Başak Edizgil provided an assessment of the November inflation data. The evaluation stated that the TUIK CPI data is consistent with the previously projected interest rate cuts by the Central Bank in January.
12punto
Goldman Sachs economists Başak Edizgil and Clemens Grafe provided an assessment regarding the monthly inflation rate, which was announced at 2.24 percent, above expectations. The evaluation stated that the TUIK CPI data is consistent with the previously projected interest rate cuts by the Central Bank of the Republic of Turkey (CBRT) in January.
In the note published by Goldman Sachs, it was stated, “First, we continue to believe that the CBRT needs to see at least two inflation prints showing a significant deceleration in the monthly inflation trend,” while adding, “Second, although high food inflation stemming from supply shocks is considered outside the control of monetary policy, we believe the CBRT will have to take this into account this time because the probability of strong secondary effects in the current environment is high.”
EMPHASIS ON FOOD PRICES
Regarding food inflation, the report stated, “Food prices are quite remarkable and continue to drive inflation expectations, which remain high in Turkey. A rate cut by the CBRT in December could be seen as an early step in an environment where food inflation is rising and could create a risk of re-dollarization. Furthermore, although the shock itself may be temporary, the pass-through of such shocks increases in high-inflation regimes and is more easily reflected in the core component of the CPI.”