NO CHANGE IN INTEREST RATES, INFLATION WILL CONTINUE TO RISE: MARKET PARTICIPANTS SURVEY

The CBRT market participants survey was announced last Friday morning.

Here are the results:

• January CPI expectation is 6.5%

• 2022 year-end CPI is 29.8% (was 23.9% in the previous survey)

• Year-end USD exchange rate expectation is TRY 16.13. (was 13.77 in the previous survey)

• The policy rate expectation for the Monetary Policy Committee meeting on January 20 is 14%.

• The policy rate expectation for the next three months is 14%.

Market participants do not expect any interest rate changes out of this week’s MPC meeting, but inflation expectations continue to deteriorate. It is expected that growth will slow down and the current account deficit will narrow. Deterioration in inflation expectations poses a risk not only for the continuation of the increase in prices but also for deterioration in pricing behavior and dollarization.