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HSBC Revise 2024 Inflation Forecasts Higher, Expect 45% Terminal Policy Rate

TURKEY
  • HSBC revise up their 2024 Turkey inflation forecasts slightly, but continue to see headline inflation peaking at close to 70% in May, before moderating to 45% by the end of the year (43% previously). The CBRT sees end-2024 inflation at 36%, albeit in a wide forecast range of 30-42% (fresh forecasts are due to be published next month).
  • HSBC say the CBRT did not give a strong indication that the December rate hike was the last in its current tightening cycle, as they had expected it to. Instead, the guidance suggests to them that another rate rise of 250bp is highly likely when the central bank meets next on January 25 (vs HSBC’s previous forecast of no further hikes in 2024).
  • Therefore, HSBC’s new base-case scenario assumes that 45% will be the terminal policy rate, but the outlook is uncertain, and risks may be tilted towards more hikes, they note.

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