Potential For Hikes Still There

August 2008 | Market Strategy

Despite inflation spiking to a 55-month high of 12.1% y-o-y in July, the Central Bank of the Republic of Turkey (CBRT) held its benchmark overnight borrowing rate at 16.75% on August 14. In a press statement, the monetary policy committee emphasized that aggregate demand continued to be restrained and combined with slowing energy prices, this was suggestive of steady disinflation over the medium term. While not mentioned in the press statement, we also note that the outlook for food prices has also improved region-wide this summer. In particular, a far more productive harvest should directly weigh on non-processed food price growth by the tail-end of Q3.

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