In the CBRT March Market Participants Survey, the current year-end inflation expectation was 40.47%. When we look at the short-term inflation expectations; March inflation is expected to be 4.13%, April inflation to 3.29% and May inflation to 2.40%. If inflation increases in line with the expectations in the said months, annual inflation in March, April and May will be 59.11%, 61.63% and 64.05%, respectively.
Our inflation expectation is at 46.2% for the end of the year, higher than the general expectation of the market and the assumptions of the Central Bank. At this point, we consider it appropriate to weight the upside risks regarding the current forecast path due to the effects of TRY and the effects of the conditions brought by the war in the coming months. We consider that the tension between Russia and Ukraine, and in this context, the rise in commodity prices, especially oil, will have an additional impact on the supply and price-related risks in terms of inflation, which also prevailed in the previous months. These effects will arise from the cost factors imposed both by global inflation and internal inflationary dynamics. We expect the course of inflation in current bands or at higher rates to be valid until the last month of the year, with the high base of last year to operate in December and a decrease in the last phase.
According to the average inflation forecasts for the next 12 and 24 months, inflation is expected to be 26.43% and 17.03%, respectively. Thus, the average of inflation expectations for the next 12 and 24 months became 21.7%.
Interest rate expectations in the Repo and Reverse Repo Market were 14.22% for the end of the month. The market predicts the one-week repo rate, which is the policy rate of the Central Bank, as 14, 14, 14.78 and 15.50% in the current month and 3, 12, and 24 month future expectations, respectively.
While the CBRT is expected to keep the interest rates constant for this month and the next 3 months, we observe that the interest rate assumptions for the forward period are higher. In an environment where global financial risks have increased, mainly due to price stability risks and unsustainable negative real interest position, we do not find this level of the Central Bank sustainable, and we think that market conditions will include more challenging dynamics to tighten monetary policy in the coming months. Although we do not expect any action from the Central Bank at the March 17 meeting, we understand that the price stability factor will be carried out within the framework of financial products and fiscal policy control mechanism in the near future.
We see downward changes in growth expectations. The 2022 GDP expectation has been reduced to 3.4%. The forecast for 2023 was 4.2% growth in the March survey period. In terms of growth, we see problems such as the effects of the last war conditions, domestic and foreign demand, and the decrease in the contribution of input and energy problems to production as a downside. We expect the continuation of practices such as facilitating credit conditions in the implementation of growth-oriented policies, plus a broad fiscal policy ground. Although we expect the growth to normalize towards the 4% band this year, we evaluate the current risk balance to the downside. The current account deficit expectations of market participants are increasing, especially if we include the conditions of the last war due to the increase in energy imports, we expect the current account deficit to show a trend towards 2020 levels this year.
Kaynak: Tera Yatırım
Hibya Haber Ajansı
