American multinational financial services company J.P. Morgan has revised its 2021 GDP growth forecast for Turkey from 6.1 percent to 6.8 percent in its report regarding the monetary policy decisions of the Turkish central bank. J.P. Morgan stated that the upward revision of the forecast considered the acceleration of vaccinations and strong local demand, and said that the need for a tight monetary policy continues to increase due to price pressures caused by rising costs.
J.P. Morgan noted that the Turkish central bank has kept its interest rates at 19 percent as expected.
In the report, J.P. Morgan stated that price pressures are still strong despite the recent bearish surprises in inflation, and that the Turkish central bank should keep the pressures under control and ensure a recovery in policy credibility. Saying that the inflation recorded below expectation in April and May is temporary and that factors affecting inflation remain, J.P. predicted that the first rate cut would be 100 basis points in September.
“We warn once again that an early easing could undermine already weak policy credibility and be detrimental to the economic outlook,” J.P. Morgan said.