Page 34 - TURKRptOct19

lucky politician - and the global easing cycle, plus lower oil/energy prices which come with weaker global growth are certainly helping out here,” Timothy Ash of Bluebay Asset Management said in an emailed note to investors.
Strong base effects meant Turkey’s official consumer price index (CPI) inflation fell sharply to 9.26% in September after slowing to 15.01% in August. The Turkish Statistical Institute (TUIK) confirmed the much anticipated big decrease, which took the rate into the single-digit figures for the first time in two years, in an October 3 announcement. It led to immediate and widespread predictions that the central bank will follow through with more rate cuts.
“The gap between the policy rate at 16.5% currently and a single-digit inflation rate will most probably attract the president’s attention,” Inan Demir, an economist at Nomura International in London, told Bloomberg after the latest inflation data was announced.
“These figures mean that President Erdogan is likely to keep up the pressure on the central bank for further large interest rate cuts,” Jason Tuvey of Capital Economics said, re-emphasising the point.
Inflation is widely expected to rebound by the end of this year to around 12- 13%. However, that still leaves plenty of space for the central bank to ease policy a bit more. Three weeks ago, the regulator adopted a second consecutive sizeable rate reduction. Since late July, it has slashed the key rate by 750 bp to the present 16.50%.
Also eyecatching was a big change in producer price index (PPI) inflation, which for September came in at 2.45%, after a 0.13% m/m rise, from 13.45% in August. PPI reached a peak 13 months ago of 46.15%.
Just short of midnight on October 2, the lira was 0.14% stronger against the dollar at 5.6925.
4.2.2 PPI dynamics
34 TURKEY Country Report October 2019 www.intellinews.com