JPMorgan evaluated President Erdogan’s appointment of hawkish Vice President Fatih Karahan instead of CBRT President Hafize Gaye Erkan and said, “President Karahan and two hawkish vice presidents will guide MPC decisions by focusing more on inflation.”
JPMorgan said, “Although sudden leadership changes may cause discomfort for investors, we see the new CBRT President as positive for disinflation and the lira. We think that the reshaped MPC will probably be more hawkish. The stance of the two MPC members (Dr. Elif Haykir Hobikoglu and Dr. Fatma Ozkul) is unknown, but in our opinion, the President and the two hawkish vice presidents will guide the MPC decisions by focusing more on inflation. The dovish trend in the last MPC statement is now likely to reverse. We expect CBRT Governor Fatih Karahan to give a hawkish guidance at the CBRT Inflation Report Press Information Meeting next Thursday, if not sooner.”
Stating that monetary policy is likely to be more sensitive to the inflation outlook going forward, JP Morgan said, “We expect higher rates for longer with tighter macroprudential measures.”
In its evaluation note, JPMorgan stated, “We see it more likely that the CBRT will increase interest rates than decrease interest rates. However, we do not believe that the interest rate will increase yet and we keep the highest policy rate at 45%, taking into account the upside risks.”
“Another positive development is that President Fatih Karahan will be able to provide more coordination between monetary and fiscal policies to combat inflation,” said JPMorgan, adding that Treasury and Finance Minister Mehmet Simsek stated that the new President Fatih Karahan was appointed with his support.
JPMorgan Vice President Cevdet Yilmaz also emphasized that he supports the new CBRT President Fatih Karahan, and that they believe that the coordination between fiscal and monetary policies is very important to see disinflation in 2024 by limiting tax increases as well as wage increases and managed energy price increases.
Source: Patronlardunyasi / Prepared by Irem Yildiz