US investment bank Goldman Sachs predicted that inflation in Turkiye may decline faster than expected.
In the report published by Goldman Sachs’ Central and Eastern Europe, Middle East and Africa economic analysts, it was emphasized that inflation may decline faster than expected, considering the speed at which the Central Bank of the Republic of Turkiye (CBRT) reduces the money supply in the market.
The report stated that inflation could drop to 30% at the end of the year, compared to the forecast of 42.6%.
Looking at the current communication of the CBRT, the report predicts that the Bank will increase the policy rate by 250 basis points to 45% this month, and reminds that Goldman Sachs’ previous estimate for the policy rate was 42.5%.
The report noted that as inflation declines faster than the markets price, the Bank may start to reduce the policy interest rate in the middle of the year, and that it can do this without creating pressure on the TL.
“Given our view that a faster-than-expected decline in inflation will not necessarily require a large negative output gap,” the report said, “the risk of early loosening of monetary policy is lower than market pricing.”
Source: AA / Prepared by Irem Yildiz