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Goldman Sachs Believe Falling Inflation Will Facilitate Easing from Q3

TURKEY
  • Goldman Sachs think the acceleration in sequential price pressures in January will be temporary, although services inflation will stay elevated for most of 2024. They expect the gap that opened between headline and core inflation to remain through Q1 but reverse in Q2 with headline inflation accelerating above core due to the removal of energy subsidies.
  • Their forecasts are close to consensus for H1 but substantially lower from Q3 onward as they think once the pass-through from the wage and energy shocks fade away, inflation will start falling sharply again as it did in Q4-23 to 30% by year-end.
  • Goldman Sachs think falling inflation will allow the CBRT to start easing monetary policy from Q3 onward without putting undue pressure on the TRY and see end-year rates at 25%.

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