巴黎银行-新兴市场-宏观策略-土耳其：消费者价格指数的下降-20190703-7页_589kb

Turkey – Falling from the Top of the CPI Waterfall

Core Content

This document provides an analysis of Turkey's inflation trends and the implications for the Central Bank of the Republic of Turkey (CBRT)’s monetary policy. It outlines the expected trajectory of inflation, the potential for rate cuts, and the impact on the Turkish Lira (TRY) in the context of broader market dynamics and regulatory disclosures.

Key Messages

• CPI Data and Forecast:

  • Turkey's June CPI came in at 0.03% m/m, close to the forecast of 0.05%, significantly below the Bloomberg consensus of 0.20%.
  • Annual CPI fell to 15.7% from 18.7% in May, signaling the acceleration of a downward trend.
  • The document expects 400bp of rate cuts by year-end, bringing the policy rate to 20%.
  • The CBRT is likely to initiate a rate cutting cycle with a 100bp cut at the 25 July meeting.

• Inflation Drivers:

  • Food prices (which accounted for about a third of year-to-date annual inflation) have started to normalize.
  • Core goods CPI also showed significant improvement, indicating that FX pass-through effects are diminishing.
  • Services inflation decelerated to 14.92% from 15.15%, a major positive sign for the central bank's easing stance.

• July Disinflation Outlook:

  • Recent price hikes aimed at repairing the budget deficit are expected to add 153bp to July’s monthly CPI inflation.
  • These hikes include contributions from food (12bp), energy (5bp), utilities (44bp), and tax cut reversals (92bp).
  • Despite these hikes, the real CBRT policy rate may remain around 7%, setting the stage for future rate cuts.

• Q3 and Q4 CPI Trends:

  • Favourable base effects and lower FX pass-through support the downward CPI trend in Q3.
  • The CPI is forecast to bottom at 11.5% in October, with some resilience in Q4 as base effects fade.
  • Annual CPI is expected to end the year at around 16%, with a downside risk noted.

• Monetary Policy Outlook:

  • The inflation trajectory provides the CBRT with plenty of room for monetary easing.
  • The report suggests that the central bank will continue its easing cycle, with further cuts expected throughout the year.

Market View

• The document anticipates stabilization in geopolitical risk, which could support the TRY outperforming peers.
• It highlights the potential for a long TRY versus pay rates position, citing positive carry as a key benefit.
• The market may be overly optimistic about the number of rate cuts, which could create opportunities for investors.

Regulatory and Legal Disclosures

• The document is non-independent research and is intended for Relevant Persons as defined under MiFID II.
• It is not investment research and is not subject to any prohibition on dealing ahead.
• BNPP may have conflicts of interest due to its involvement with sales and trading, and may engage in transactions inconsistent with the views expressed.
• The information is not intended for retail investors and is provided strictly confidential.
• It is not a prospectus, advertisement, or public offering in Canada, the U.S., or any other jurisdiction.
• The document may contain performance data based on back-testing, which is illustrative only and not indicative of future results.
• Options and ETFs referenced in the document carry high risk and are not suitable for all investors.
• Convertibles and other unregistered securities may be restricted and only available to Qualified Institutional Buyers or non-U.S. persons.

Summary of Key Figures

• June CPI: 0.03% m/m (vs. forecast 0.05%, vs. Bloomberg 0.20%)
• Annual CPI: 15.7% (vs. 18.7% in May)
• Expected annual CPI by year-end: ~16%
• Expected CPI bottom: 11.5% in October
• Expected rate cuts: 400bp by year-end, starting with 100bp at 25 July
• Policy rate forecast: 20% by year-end
• Real policy rate in July: ~7%

Conclusion

The report presents a bullish outlook for the Turkish Lira, driven by projected rate cuts and inflation moderation. It emphasizes the positive carry from a long TRY position and the potential for market outperformance. However, it also highlights risks associated with the complexity of financial instruments and the non-investment advice nature of the document.