The Central Bank Governor Sahap Kavcioglu said the Central Bank has been left alone in fight against inflation when he announced that the bank lifted the year-end inflation forecast from 12.2% to 14.1%. Regulations on the food inflation, which annually reached 25% and creates the most crucial part of inflation basket, are collected under three titles in the Economic Reform Package. These regulations may support the decrease in annual inflation, but they don’t seem to be completed on the scheduled date.
Contract farming, for instance, included in the Economic Reform Package, is considered as the most important factor in terms of agricultural production and food inflation. The regulation, which eliminates the existing handicaps in the system and imposes various sanctions on both purchaser and vendors in case they don’t comply with the contract, should be enacted until September 30. However, the Parliament, which will enact this regulation requiring law, will open on October 1.
On the other hand, the Marketplace Law, which couldn’t be implemented although it has been discussed for years, is planned to be enacted until the new year. This regulation is particularly expected to decrease agency costs. The early-warning system, which will be set up in order to prevent fluctuations in food prices and to decrease their impact on inflation, should also be completed until September 30, according to the reform package. Why need a plan if you don’t follow it?
Looking at the money market, foreign exchange rates has slightly fluctuated for two days. USD/TRY hovers around 8.60-8.61, while EUR/TRY is traded at 10.08. TRY assets have concentrated on the Central Bank’s interest rate decision to be announced tomorrow.
Gold prices slightly increased after concerns over increasing coronavirus cases despite rise in bond returns while investors wait for the U.S. Consumer Price Index. Spot gold surged by 0.11% to USD 1,730 per ounce. Brent crude, meanwhile, rose by 0.71% to USD 71.13 per barrel.
DAILY AGENDA
The overall export unit value index increased by 11.2% while the overall import unit value index rose by 24.2% in June, compared to the same month of the previous year, according to the Turkish Statistical Institute (TurkStat).
The Construction Cost Index (CCI) surged by 42.48% in June, compared to the same month of the previous year, according to TurkStat. The CCI also increased by 2.89% on a monthly basis.
President Recep Tayyip Erdogan will attend the joint broadcasting of Kanal D and CNN Turk. Erdogan will answer questions about the country’s agenda (9.00 pm).
