HSBC's assessment of 'Fatih Karahan': Emphasis on inflation and interest rates

HSBC economist Melis Metiner, in a note titled “New central bank governor, same policy”, evaluated the impact of the resignation of Central Bank of the Republic of Turkey (TCMB) Governor Hafize Gaye Erkan and the appointment of Deputy Governor Fatih Karahan in her place on monetary policy.

MONETARY POLICY COMMENTARY

According to a report by Bloomberg; stating that they do not expect the change in leadership to lead to a change in monetary policy, HSBC noted that they believe the TCMB's tightening cycle ended last month and that they expect the policy rate to remain unchanged throughout this year.

In the published note, it was stated that HSBC continues to see risks regarding Turkey's inflation outlook and projects that headline inflation will moderate to 45 percent by the end of this year, which is above the TCMB's forecast of 36 percent.

UPWARD REVISION OF INFLATION EXPECTED

The note, which reminded that the TCMB will publish its new inflation report on February 8, included the following statements: “We believe the year-end forecast could be revised upwards. In the near term, the focus of the markets will be on other tightening measures implemented by policymakers, including macroprudential policy efforts, liquidity measures, or potential fiscal tightening.”

News Source: 12punto