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JPMorgan ups Turkey inflation, interest rate forecasts

Published 09/04/2023, 10:12 AM
Updated 09/04/2023, 10:16 AM
© Reuters. People shop at a fresh market in Istanbul, Turkey July 5, 2023. REUTERS/Dilara Senkaya/File photo
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LONDON (Reuters) - Higher-than-expected inflation data for August published on Monday prompted JPMorgan to revise its year-end inflation forecast to 65% from 62% with the annual rate now expected to peak at 73% in May 2024, according to the Wall Street bank.

The bank also said it saw upside risks to its year-end policy rate forecast, which it kept at 35%, but predicted that the central bank's key interest rate would end next year at 45% rather than previous estimates of 40%.

"August CPI suggests protracted disinflation process," JPMorgan's Fatih Akcelik said in a note to clients.

© Reuters. People shop at a fresh market in Istanbul, Turkey July 5, 2023. REUTERS/Dilara Senkaya/File photo

"Since we expect persistent inflation, we forecast more monetary tightening to address inflationary pressures after March 2024 municipal elections."

Turkey's annual inflation rate surged to a higher-than-expected 58.94% in August, official data showed earlier on Monday, rising for a second month after a steep fall in the lira currency and recent tax increases.

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