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USDTRY: Turkish headline CPI inflation better than expected - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 3, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Ned Rumpeltin, European Head of Currency Strategy at TD Securities, notes that the Turkey’s October headline CPI inflation came out better than expected at 7.58% Y/Y, below the expectation of 7.80% and down from the prior of 7.95%.

    Key Quotes

    “The main driver of the lower headline rate was a fall in food price inflation to 8.7% Y/Y in October from a prior 10.7%. Inflation in the Housing, Water, Electricity, Gas and Other Fuels category also fell sharply to 6.0% Y/Y from 8.3% as a result of lower energy prices. But inflation in the Transport category increased to 4.0% Y/Y from 2.4%, mainly due to an increase in vehicle prices resulting from the weak lira.”

    “However, core inflation came out worse than expected at 8.92% Y/Y, above the expectation of 8.47% and up from the prior 8.23%. This is likely to be mainly due to lira weakness, but with the strong rally in TRY since the start of October we should see some downwards pressure on core in the months ahead.”

    “The CBRT recently revised up its forecast for end-2015 inflation to the more realistic level of 7.9% Y/Y, way above its 5% target. However, in our view its upwards revised forecast for end-2016 inflation of 6.5% Y/Y looks optimistic given the CBRT’s general reluctance to tighten policy when inflation is well above target.”
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