Latest news with #CBRT
RTÉ News
3 days ago
- Business
- RTÉ News
Turkish inflation hits lowest level since November 2021
Turkish inflation eased further in May to 35.4%, reaching its lowest level since November 2021, official figures showed today, paving the way for a possible interest rate cut. Consumer price rises have now eased for 12 months in a row, after soaring to 75% in May last year. Turkey's central bank (CBRT) raised its key interest rate to 46% in April after protests over the arrest of Istanbul's opposition mayor put pressure on the economy and caused the lira to slump against the dollar. The move also came amid uncertainty over the effects of US President Donald Trump's tariffs. The central bank had previously lowered rates as inflation fell. "The larger-than-expected fall in Turkish inflation in May, to 35.4%, will increase the CBRT's confidence that it can restart its easing cycle soon," said Nicholas Farr, emerging Europe economist at London-based Capital Economics research firm. "While we had thought the easing cycle would resume in Q3 (the third quarter), a rate cut this month is now not out of the question," Farr said. The ENAG group of independent economists disputes the official inflation rate, estimating the May figure stood at 71.2%.
The Sun
4 days ago
- Business
- The Sun
Turkish inflation hits lowest level since November 2021
ISTANBUL: Turkish inflation eased further in May to 35.4 percent, reaching its lowest level since November 2021, official figures showed Tuesday, paving the way for a possible interest rate cut. Consumer price rises have now eased for 12 months in a row, after soaring to 75 percent in May last year. Turkey's central bank (CBRT) raised its key interest rate to 46 percent in April after protests over the arrest of Istanbul's opposition mayor put pressure on the economy and caused the lira to slump against the dollar. The move also came amid uncertainty over the effects of US President Donald Trump's tariffs. The central bank had previously lowered rates as inflation fell. 'The larger-than-expected fall in Turkish inflation in May, to 35.4%, will increase the CBRT's confidence that it can restart its easing cycle soon,' said Nicholas Farr, emerging Europe economist at London-based Capital Economics research firm. 'While we had thought the easing cycle would resume in Q3 (the third quarter), a rate cut this month is now not out of the question,' Farr said. The ENAG group of independent economists disputes the official inflation rate, estimating the May figure stood at 71.2 percent.
Yahoo
02-04-2025
- Business
- Yahoo
Türkiye: Political Uncertainty Clouds Inflation Outlook, Further Policy Normalisation
Higher financial volatility in Türkiye could be credit negative if it leads to higher inflation or to a reversal of the current orthodox macroeconomic policy mix that the authorities have consistently pursued since the general elections of May 2023. Scope Ratings (Scope) upgraded the long-term ratings to BB- in December 2024 based on more effective monetary policy driving inflation lower, helping to rebuild international reserves, and raising prospects for tighter fiscal policy. However, significantly higher political uncertainty, following the arrest of an opposition politician, coupled with a more challenging international environment (trade, geopolitical tensions) could make it much harder for officials to contain inflation. In response to the Turkish lira's sharp depreciation of 4% against the US dollar, on 20 March the Central Bank of the Republic of Türkiye (CBRT) raised its overnight lending rate, suspended one-week repo auctions and injected liquidity into local markets. Figure 1. Inflation has steadily declined over the past nine months % The impact on the inflation outlook could be even bigger as the CBRT has eased financial conditions since December 2024, reducing its policy rate from 50.0% to 42.5% (Figure 1). Sustained higher uncertainty is also expected to diminish the economy's growth prospects. After 3.2% growth in 2024, real GDP growth is likely to slow to 3.0% in 2025. Household consumption, the main driver of domestic growth, is sensitive to higher inflation and borrowing costs. A more pronounced economic slowdown also increases the risk that fiscal policy remains expansionary, challenging the government's ability to reach its objective of a primary fiscal balance by 2026. Scope expects a budget deficit of about 3.6% of GDP in 2025 and in 2026, and a general government debt-to-GDP ratio of 26%. The Turkish economy is more resilient than it was a few years ago and can accommodate some volatility, due to higher international reserves and more effective macroeconomic policies, which have eased the strains on public and private-sector balance sheets. Non-resident holdings rose to more than 10% of government debt in January 2025, up from 2% in January 2024. Net assets of the CBRT, excluding foreign-currency swaps with commercial banks, have reached multi-year highs of more than USD 40bn. However, Türkiye's BB- ratings reflect prominent external and financial risks, as reflected in downward pressures on the net foreign positions of local banks. Local banks' balance sheets could deteriorate if they are called on by the authorities to continue supporting the local currency. If sustained over a prolonged period, the interventions of the CBRT to contain the depreciation of the lira will also erode its reserves and lower resilience against future external shocks. This could reduce confidence in lira-denominated assets and encourage higher dollarisation. Although Türkiye's public finances have proven to be resilient to domestic political uncertainty in the past, the sovereign's rating trajectory remains vulnerable to the challenging macroeconomic conditions and sudden shifts in domestic economic policy. For a look at all of today's economic events, check out our economic calendar. Thomas Gillet is a Director in Sovereign and Public Sector ratings at Scope Ratings GmbH. This article was originally posted on FX Empire European Rearmament Plans: National Policy Choices Will Shape Fiscal Impact Veeva Shares Advance on Revenue, AI Growth Earnings Beat, Big Money Lift Brown & Brown Shares Strong Revenue, Drug Performance Lift Catalyst Shares Big Money Returning for Eli Lilly CME Group Rising on Record Revenue Sign in to access your portfolio
