ISTANBUL: Turkey’s annual inflation climbed above 16 percent in March for the first time since mid-2019, data showed on Monday, piling pressure on new central bank governor Sahap Kavcioglu to maintain tight policy after his surprise appointment.
Consumer prices were up 16.19 percent year-on-year, higher than 16.11 percent in a Reuters poll and 15.61 percent in February. Inflation remains well above a 5 percent official target and has been in double digits for most of the past four years.
Month-on-month CPI inflation was 1.08 percent, the Turkish Statistical Institute said, compared to a Reuters poll forecast of 1.04 percent.
The former central bank governor, Naci Agbal, had raised the policy rate to 19 percent from 10.25 percent. But he was ousted on March 20 — after only four months on the job and two days after a last rate hike — prompting a 12 percent drop in the lira to near record lows.
President Tayyip Erdogan has abruptly ousted four bank chiefs in less than two years, hurting Turkey’s monetary credibility and contributing to the currency’s long-term decline, which in turn has driven up overall inflation via imports.
Kavcioglu has in the past criticized tight policy, including making the unorthodox claim shared by Erdogan that high rates cause inflation. Yet he has told investors and bankers in recent weeks rates must remain high due to high inflation.
The producer price index rose 4.13 percent month-on-month in March for an annual rise of 31.2 percent, the data showed.
The monthly CPI price rise was underpinned by demand in the health, education and hospitality groups, including restaurants, after coronavirus measures were eased.
Annual rises were driven by higher energy and import prices which raised transportation-related prices by nearly 25 percent.
According to a February forecast, the central bank expected a maximum of 17 percent inflation in March and a bit more in April. Analysts predict it will rise through April, when Goldman Sachs expects it to peak at 18 percent.
Turkey inflation above 16% in test for new central bank chief
https://arab.news/bjqaz
Turkey inflation above 16% in test for new central bank chief
- Month-on-month CPI inflation was 1.08 percent, the Turkish Statistical Institute said
- President Tayyip Erdogan has abruptly ousted four bank chiefs in less than two years, hurting Turkey’s monetary credibility
Gold rises on Iran war safe-haven bid; firm dollar limits upside
BENGALURU: Gold prices rose on March 5, lifted by safe-haven demand amid an escalating war in the Middle East, while a stronger dollar and concerns around the US Federal Reserve’s monetary policy capped gains.
Spot gold was up 0.6 percent at $5,168.43 per ounce, as of 11:55 am Saudi time. US gold futures for April delivery were up 0.9 percent at $5,179.20.
Israel launched a large wave of strikes on Tehran on March 5, targeting what it said was infrastructure belonging to the Iranian authorities, after Iranian missiles sent millions of Israelis rushing into bomb shelters.
“On the one hand, there may be greater safe-haven demand for gold given the ongoing conflict in the Middle East. On the other hand, the risk of a prolonged period of higher energy prices that takes rate cuts off the table, and adds to the chance of rate hikes, could be capping further gains,” said Hamad Hussain, a climate and commodities economist at Capital Economics.
The US dollar rose about 0.3 percent after briefly retreating from three-month highs, as the fallout from the war roiled global markets and kept sentiment fragile.
Concerns about energy supply continued to drive up oil prices and stoke inflation fears.
Gold is considered a hedge against inflation in the long run, but also tends to thrive when interest rates are lower, as it is a non-yielding asset.
President Donald Trump, on March 4, officially nominated former Federal Reserve Governor Kevin Warsh to be the US central bank’s next chair.
US economic activity grew slightly, prices continued to increase and employment levels were stable in recent weeks, the Federal Reserve said on Wednesday in its latest “Beige Book” report.
Markets expect the Fed to keep rates steady at its next policy meeting on March 18, according to CME Group’s FedWatch tool.
Investors are looking out for the weekly US jobless claims data, due later today, and the US employment report for February on March 6 for further clues on monetary policy this year.
Spot silver rose 0.5 percent to $83.80 per ounce. Platinum gained 1.1 percent to $2,172.20, while palladium lost 0.7 percent to $1,662.07.
