(Bloomberg) — Turkish monthly inflation in January jumped the most since August, an upswing that could test the central bank’s resolve to quell inflation quickly after ending its tightening cycle last month.
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Policymakers called an end to their tightening cycle last month but Hafize Gaye Erkan’s surprise removal from the top job has left the path forward uncertain. Fatih Karahan, a deputy governor chosen to replace her, said on Sunday that the central bank would be “ready to act” if the inflation outlook deteriorates.
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On the back of a sharp increase in the minimum wage and government tax adjustments, price gains in January quickened to 6.7% from the previous month, after five consecutive monthly declines, according to data published on Monday. The median forecast in a Bloomberg poll of economists was 6.5%.
In annual terms, inflation rose slightly to 64.9% from 64.8% in December.
The central bank’s latest outlook suggested monthly price increases will slow in February and beyond after last month’s surge.
Deutsche Bank AG economists said over the weekend that the leadership change and stickier inflation has opened the way for further tightening.
The current benchmark rate is 45% but the central bank it could reassess policy depending on inflation outlook.
The policy path should become clearer this Thursday, when Karahan presents a quarterly inflation report and take questions from economists and reporters in Ankara.
–With assistance from Joel Rinneby.
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