What matters this morning

The second inflation report of the year will be launched today with a press conference. The Central Bank Governor Sahap Kavcioglu will meet with a large group of participants consisting of economists and journalists first time in a live broadcasting. Kavcioglu will make a presentation about the inflation report at the meeting before he will answer the questions of journalists and economists.

Many questions will be addressed to the Central Bank Governor, including monetary policy stance, reserve issues and regulations on the cryptocurrency market. However, large number of questions are likely to be addressed about the ‘interest step’.

The annual Consumer Price Index (CPI) estimation stood at 9.4% in the first inflation report for 2021.  However, economists expect that the annual inflation will be revised upward in the second report, which will reach around 11.5%.

Sekerbank Chief Economist Dr. Guley Elif Yildirim said the annual inflation can exceed 19% in April and May. “Considering the base effect, the downward trend of inflation can clearly be observed only by the end of the last quarter,” she added.

Taner Ozarslan, founding partner of Sparta&Co., also has similar opinions. “CPI can be seen at 18% in the upcoming months”, he said stressing that the impact of the holy Ramadan and restrictions on food prices and fluctuations in foreign exchange (FX) rates are important in this respect. He also underlined that the current inflation is more important than the year-end expectation.

In other developments today, FX rates remains at yesterday’s levels. USD/TRY is traded at 8.18, while EUR/TRY appreciated at 9.93. However, the Central Bank Governor Kavcioglu’s presentation on the inflation report will determine the course of the rates.

Oil prices, meanwhile, started to increase with the expectation of recovery in demand this summer, despite the concerns over the impact of increasing number of COVID-19 cases in India, Japan and Brazil. Brent crude is traded at USD 67.49 with a 0.3% increase.

Gold prices also increased after USD depreciated following the FED’s interest decision. Spot gold reached USD 1,779 per ounce.


The Economic Confidence Index dropped by 5.1% to 93.9 in April, compared to March, according to the Turkish Statistical Institute (TurkStat).   

The Services Producer Price Index (S-PPI) increased by 23.7% in March, compared to the same month of the previous year, according to TurkStat. The S-PPI rose by 3.96% on monthly basis.

The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).

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