Page 7 - TURKRptSep22

The spread between Italy 10-year and Germany 10-year papers remains above the 200bp-level. On June 15, the ECB held an emergency meeting. It said that it would continue buying stressed government papers.
Inflation in the Euro Area extended its record-breaking series to a ninth consecutive month with 8.9% y/y in July. Producer price inflation declined from 36.3% y/y in May to 35.8% in June (Record: 37.2% y/y in April).
Federal Reserve
On June 15, the Fed hiked its policy rate by 75bp to 1.50-1.75%.
The US state central bank governors expected to deliver seven more rate hikes in the remaining four meetings of 2022 (July 27, September 21, November 2, December 14). That would bring the policy rate to 3.25-3.50%.
On July 27, the FED hiked its policy rate by 75bp to 2.25-2.50%.
On September 21, the Fed’s open market committee is currently expected to deliver another 50bp rate hike following its next meeting. Updated projections by governors will also be released.
Annual CPI inflation in the US declined from 9.1% in June to 8.5% in July. As of August 30, the average gasoline price in the US was up 22% y/y to $3.84 per gallon (Record: $5.02 on June 14).
Note that more than $2 trillion has already been printed. It presently resides on the Fed’s balance sheet under the Treasury General Account (TGA) and the Reverse Repo (RRP) account. When the Fed zeroes its net money printing volume, this money will continue flowing into the system.
Tightening via both monetary and fiscal policies is marking out the current period. How long it can possibly last is under observation. The finance industry is already holding media campaigns to reverse the tightening.
30-year mortgage rates in the US stood at 5.55% on August 25. November 8: Midterm elections in the US. Democrats are expected to
lose their majority in the Congress.
The US is getting ready for a more powerful populist president (not Trump but someone else) in 2024.
Social tensions and wars across the globe lie ahead.
● Erdogan’s monetary policy remains totally out of control.
On August 3, official CPI inflation for July was released at 79.6% y/y, the highest figure recorded since the 80.4% posted in September 1998.
At 80%, Turkey stays in sixth place in the global inflation league.
Turkey’s official producer price (PPI) inflation, meanwhile, entered three-digit territory for the first time since March 1995, when it posted 144.3% y/y.
7 TURKEY Country Report September 2022 www.intellinews.com