With tensions remaining high, the brouhaha over the ‘probe’ of government corruption daring to find actual corruption rolls on and now the military is complaining of bent judges in their own ‘coup’ trial:
- *TURKISH ARMY SAYS EVIDENCE FABRICATED IN COUP TRIAL: HURRIYET
- *TURKEY ARMED FORCES FILES CASE CITING PLOT AGAINST IT: HURRIYET
Add to this the hike in consumption taxes and fears over inflationary surges and the Lira has re-collapsed back to record lows against the USD and Istanbul stocks are re-tumbling.
The Military involvement (via Bloomberg),
Turkey’s Armed Forces asked the prosecutor’s office to open a case against what it said was a plot targeting it in trials of retired and active duty officers for alleged coup planning, Hurriyet newspaper says, citing a defense lawyer in one of the coup plot cases, Haluk Peksen.
Evidence against members was fabricated to target the Turkish Armed Forces: Hurriyet
Security officials, judges and prosecutors ignored defense of members and manipulated evidence: Hurriyet
Hundreds of military officers, including top generals, have been convicted in a series of cases on charges of plotting to overthrow PM Recep Tayyip Erdogan’s govt
On Inflation and Tax Hikes (via Goldman),
The government hiked various consumption taxes and surcharges on tobacco and alcoholic products, cars and mobile phones, effective from January 2.
We calculate that these tax hikes will add roughly 1.0pp to headline CPI, eradicating almost entirely the favourable base effect (roughly 1pp) set by last year’s administered price and tax hikes. This means headline CPI will be stuck at around the 7.5%-8% range through 2014Q1.
Sustained FX pass-through, pent-up electricity and natural gas price adjustments and possible unprocessed food price shocks (owing to unseasonably warm weather conditions) will likelycontinue to exert upside pressure on headline (and core) CPI. We continue to see end-2014 CPI at 8.3%, well above the 6.7% consensus. However, the risks to our forecasts remain on the upside.
We continue to expect the CBRT to hike (the policy relevant) O/N non-PD lending rate by 225bps to 10% in 2014. More aggressive rate hikes will probably be necessary to anchor inflation expectations, given the large imbalances undermining the TRY.
BofAML also believes the bullish trend in USDTRY is set to continue…