Inflation risks Tatha Ghose,

strategist, Commerzban­k

Dünya Executive - - REPORT -

Inflat on data for September confirms that Turkey isa tiny step away from dangerous re-escalat on of nflat on f the l ra were to weaken again.

Inflat on expectat ons are structural­ly elevated, and the underly ng trends are unfavorabl­e compared w th other emerg ng markets. A few days of the dollar rally over the past weeks has already put pressure back on the l ra, and w th the Fed set to h ke n December, there appears no l kel hood that the Central Bank of Turkey can ease off on the we ghted average cost of fund ng th s year. Even at the current level of 12% for cost of fund ng, the real nterest rate has shrunk by 1 percentage po nt over the past quarter because nflat on has accelerate­d – th s n tself w ll l kely put upward pressure on the dollar-l ra cross n the com ng months. (Oct. 5)

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