Is Turkey on the brink of hyperinflation?

As the rest of the world is concerned about soaring inflation, Turkey has issued a warning.The country’s central bank Lower key interest rates Although the national consumer price index rose 19.9% ??year-on-year in October, it rose to 15% for the third consecutive month in November.

According to a poll conducted by Reuters, the annual inflation rate on Friday is expected to exceed the 20% threshold and reach 20.7%.This will be the highest level since November 2018, when the country was moving from Currency crisis.

In recent weeks, the Turks have been watching this scene with horror, while enduring a repetition of this incident. Since the beginning of November, the exchange rate of the lira against the US dollar has fallen by 28%. Analysts have warned that if President Recep Tayyip Erdogan refuses to give up his obsession with low interest rates, Turkey may move towards hyperinflation. The country relies heavily on imports and other raw materials, which become more and more expensive as the lira depreciates.

“Overall CPI may be close to 30% [year on year] In the next few months,” Societe Generale analyst Phoenix Cullen wrote in a recent report.

“It would be an optimistic situation for the overall CPI to reach a peak of 27% in the short term,” Karen added. Laura Pietel

Will the number of U.S. jobs increase the pressure on Powell to raise interest rates?

Traders will pay close attention to Friday’s US employment report, as there are more and more questions about the future monetary policy direction of the world’s largest economy.

In early November, Federal Reserve Chairman Jay Powell Urge patience As the Fed says it will start raising interest rates Unfold Its $120 billion monthly pandemic era asset purchase plan.

Powell said that now is the “time to scale down” because the economy has made “substantial” progress in achieving the central bank’s two goals of full employment and an average inflation rate of 2%. However, he added that “to achieve maximum employment, there is still enough space”.

Recent data shows that the labor market has tightened, and the number of new applications for unemployment benefits in the United States has fallen to the lowest level since 1969.

A large number of jobs may increase expectations of rising borrowing costs. U.S. employers added 531,000 jobs in October, and Andrew Hunter, senior U.S. economist at Capital Economics, predicts that “500,000 jobs will be added in November.”

Hunter warned: “But soon, the risk of the new crown pneumonia epidemic in winter will become greater and the supply of available workers will decrease. This seems to put pressure on employment growth.”

At the same time, the core personal consumption expenditure index-the Fed’s preferred inflation indicator- Increased 4.1% in OctoberThis is the largest year-on-year increase since the 1990s, higher than the 3.7% annual increase in September.

Brian Nick, chief investment strategist at Nuveen, said this allows the Fed to take a tricky balancing act next year.

Nick said that while the US economy is still recovering from the pandemic, it is unlikely to raise interest rates, and investors will soon discover “how high the Fed’s tolerance for inflation is.”

“If’temporary’ is the buzzword this year, then next year will be’full employment’,” Nick predicted. George Steele

Will inflation in the Eurozone reach its highest point since the introduction of a common currency?

On Tuesday, the Eurozone inflation rate in November is expected to climb at the fastest rate in 30 years. This growth will match a similar record set by the United States last month, as both economies are facing soaring energy costs, strong consumer demand and supply chain disruptions.

Economists surveyed by Reuters predict that the annual headline inflation rate in the euro zone will reach 4.4% in November. This will be an increase from 4.1% in October and more than double the European Central Bank’s 2% price stability target.

This will also mark the highest interest rate since the birth of the euro in 1999 and the fastest growth rate since 1991.

The core inflation rate excluding energy and unprocessed food is expected to rise to 2.3%, the highest level in more than a decade.

Melanie Debono, economist at Pantheon Macroeconomics, said: “Overall inflation will remain high throughout the fourth quarter.” The temporary factors that currently support the overall inflation rate, such as rising energy prices and demand for services Repression and supply disruptions may be more lasting than policymakers expected. ”

Consistent with consensus, De Bono recently raised her inflation forecast for the euro zone, but believes that “the market’s view of the European Central Bank’s tightening policy in 2022 is wrong.”

According to the minutes of the meeting released on Thursday, at the October meeting, the ECB Management Committee reached a broad consensus that “there is no sign yet that rising energy prices will be transmitted to wages.

This means that potential price pressures are lower in the medium term, and the new Covid-19 variant may further increase the downside risks to the Eurozone economy and inflation outlook. Valentina Rome