Turks Split From Markets in Expecting Inflation Over 70% in Year
(Bloomberg) -- Turks expect inflation to run at more than double the rate envisaged by markets, a finding in a poll that highlights the difficulty facing policymakers in cooling domestic demand.
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People anticipate inflation at 71.5% a year from now, according to the first such survey of households made public by the central bank, compared with the 31.8% seen by market participants. The monetary authority targets price growth at 38% by the end of 2024 and 14% the following year.
The view of inflation by households is a significant factor for the headline rate of price growth, three central bank officials said in a report Friday. Unanchored expectations can fuel front-loaded spending if consumers believe prices will accelerate further in the future.
Annual inflation exceeded 75% in May before a likely drop this month that’s expected to quicken through summer.
The central bank has maintained a hawkish stance after bringing its benchmark interest rate to 50% and keeping it at that level for three months. It’s also implementing complementary tightening steps such as capping loan growth and encouraging savings in the local currency by keeping deposit rates up.
The restrictive policy is making some headway for the outlook of households, with the number of those thinking inflation will slow over the next year rising significantly since March, according to the survey. Expectations for 12 months from now declined in June by 4.6 percentage points from the previous month.
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