Turkey’s inflation is expected to jump to 16.11 percent in March, a Reuters poll showed on Wednesday, rising for a sixth straight month after the sharp decline of the lira.
The lira lost nearly 11 percent of its value in March, in a selloff that sharpened dramatically after President Tayyip Erdogan sacked the hawkish former Central Bank Governor Naci Agbal.
Stoked by concerns that the central bank would revert to unorthodox policies under the new management and cut rates prematurely from 19 percent, the lira’s depreciation is expected to lead the rise in inflation in March.
Prices in import-dependent Turkey are sensitive to rises in the exchange rate.
Adding to the upward pressure on inflation are high food prices and oil prices that remained elevated for most of the month.
The median estimate of 16 economists in the Reuters poll for annual inflation in March stood at 16.11 percent, with estimates ranging between 15.92 percent and 16.97 percent.
For the month-on-month rise, the median estimate stood at 1.04 percent, with forecasts ranging between 0.83 percent and 1.75 percent.
Inflation stood at 15.61 percent in February, its highest level since mid-2019.
Inflation expectations for coming months will likely have to be revised up depending on how far the lira weakens, said Ozlem Derici Sengul, founding partner at Spinn Consulting.
“When financial stability deteriorates, it adds another burden. The way to contain that is to raise rates further, so the central bank’s approach on this point will be important,” Derici Sengul said.
“We have doubts about whether the new management will maintain tight monetary policy for long enough,” she added.
The median estimate of nine economists that participated in the Reuters poll for inflation at year-end stood at 12.15 percent, with forecasts ranging between 10.20 percent and 15.00 percent.
That compares to the central bank’s forecast of 9.4 percent.
Governor Sahap Kavcioglu said on Monday that current elevated levels of inflation require tight monetary policy, pledging to keep the bank’s key interest rate above inflation until it was clearly on a permanent downward path.
The Turkish Statistical Institute is scheduled to announce March inflation data at 0700 GMT on April 5.