JP Morgan expects the CBRT to raise the policy rate by 100 basis points to 18 percent at its March meeting.
Evaluating the February inflation figures announced by TURKSTAT yesterday, JPMorgan predicted that the CBRT would increase the interest rates in the March meeting. It also increased its inflation forecast for the end of 2021.
Stating that the core inflation rate increased to 16.2 percent on an annual basis in February, JPMorgan stated that following this surprise, taking into account the ongoing increases in global commodity prices,
Increased the 2021 year-end inflation expectation from 10.5 percent to 11.2 percent.
Stating that the upward surprise in inflation is mainly due to factors not under the control of the CBRT, JP Morgan said, "However, the persistence of upward surprises may jeopardize the hard-won credibility. Moreover, the ongoing increase in commodity prices and the rise in interest rates will lead to a tighter monetary policy. As a result, we expect the CBRT to raise the policy rate by 100 basis points to 18.00 percent at the March meeting, "he said.
Stating that the market and price developments in the next 2 weeks may affect the CBRT's decision, JPMorgan stated that the worsening of the global risk appetite, stronger commodity prices and weakening may force the CBRT to a more sharp increase. He also emphasized that recovery in risk appetite and improvement in short-term price dynamics may encourage the CBRT not to raise interest rates less or not.
JPMorgan also stated that they continue to expect the CBRT to start easing its monetary policy in September.