Monthly inflation in Turkey surged to its highest since August of last year, which may put the central bank’s resolve to quickly curb inflation to the test following the conclusion of its tightening cycle last month, Bloomberg reported.
Last month, policymakers announced an end to their tightening cycle yet the future is still unclear in light of Hafize Gaye Erkan’s abrupt exit as top executive. The central bank would be “ready to act” if the inflation outlook worsened, stated on Sunday by Fatih Karahan, the deputy governor selected to take her place.
According to data released on Monday, price gains in January accelerated to 6.7 per cent following five consecutive monthly declines, driven by a sharp increase in the minimum wage and changes in government taxes. In a Bloomberg survey of economists, the median prediction was 6.5 per cent.
Moreover, the annual rate of inflation increased marginally from 64.8 per cent in December to 64.9 per cent.
According to the central bank’s most recent forecast, following last month’s spike, monthly price increases will ease in February and beyond.
This Thursday, when Karahan gives a quarterly inflation report and answers questions from reporters and economists in Ankara, the policy direction should become more apparent.
Over the weekend, economists at Deutsche Bank AG stated that tighter policy is now possible due to the recent shift in leadership and stickier inflation.
The central bank may review policy based on inflation forecasts, although the benchmark rate is currently 45 per cent.
