Macro Snapshot: Policy rate seems stable in July but could be decreased by 25-50bps in next 3 months, CBRT Survey indicates

MoM expectations were over the historical averages in the coming months (2003-2019 Median – Jul.: +0.3% Aug.: +0.4% Sep.: +1%).

YoY CPI figures could exceed 18% in next 3-month period.

Year-end CPI expectation reached to 15.64%, up 118bps MoM.

According to the probability distributions of inflation expectaions, YoY CPI is expected
to be at double-digit levels with a 98.2% of probability in the coming 12-months while that probability hit 66.9% for 24-month ahead.

Both short term inflation expectations (12-month:+50bps to 12.62%, 24-month ahead: +27bps to 10.43%) and the long term expectations continued to deteriorate (5-
year:+1bps to 7.51% and 10-year ahead: +1bps to 6.48%).

BIST o/n repo rate is expected to be at 19% at the end of the month.

Policy rate (19%) would be kept stable at 19% in this month but there could be a 25-50bps of cut in next 3 months.

The policy rate could be at 14.5- 15% in 12-month ahead and 12- 12.25% in 24-month ahead.

3-month bond rate expectations increased by 51bps on average.

Both 5-year and 10-year bond rates could be around 15.4-15.6% in July 2022.

Economic growth expectation of 2021 increased from 4.9% to 5.8% while next year’s expected growth remained stable at 4%.

Expectations of 12-month current account deficit of 2021 decreased from USD25.7bn to USD24.7bn and next year’s expectations decreased from USD22.4bn to USD21.3bn.

Upward trend on the expectations of USDTRY level continued in July.

Expectations of USDTRY currency for the year-end increased by 0.5% to TL8.99 and 12-month ahead increased by 1.1% to TL 9.34.


Source: Y.F. Securities Research