Latest news with #CentralBankoftheRepublicofTurkey
Qatar Tribune
19 hours ago
- Business
- Qatar Tribune
Markets price in July rate cut as Turkey inflation outlook improves
Agencies Inflation in Turkey is projected to drop below 30% by the end of the year, while the country's central bank is expected to return to rate cuts as of next month, a latest survey showed on Monday. Markets are forecasting inflation cooling to 29.86% by the end of 2025, according to the Survey of Market Participants for June by the Central Bank of the Republic of Turkey (CBRT). That is down from 30.35% in the previous month's survey. Aggressive monetary tightening since mid-2023, combined with favorable energy prices, has helped reduce Turkey's annual inflation rate by half over the past year. The inflation lastly dipped to 35.4% in May, compared to around 75% a year ago. The central bank has repeatedly cited expectations as one factor determining the course of its monetary policy. The bank last month maintained its year-end mid-point estimate for the consumer price index (CPI) at 24%, with an upper band of 29%. Turkish officials continue to emphasize that inflation will remain within this forecast band. Treasury and Finance Minister Mehmet Şimşek on Thursday cited stickiness in services inflation, which he said was preventing further improvement in headline CPI. Still, Şimşek said inflation could end the year in the 20s, stressing a steep fall in basic goods prices. The CBRT pivoted to raising its key policy rate by 350 basis points this April to 46% and pushed the overnight lending rate to 49% after Turkish assets and the lira fell sharply after Istanbul Mayor Ekrem Imamoğlu was jailed pending trial over graft charges. Before that, the bank had begun an easing cycle and gradually cut its one-week repo rate to 42.5% in March as inflation fell from the level of more than 75% that it reached in May 2024. The sharper-than-anticipated slowdown in inflation last month has reignited speculation that the bank could resume rate cuts soon. Markets see inflation 12 months from now falling to 24.56%, the CBRT survey showed. That is down from 25.06% in the previous survey. The 24-month-ahead forecast eased to 17.35%, down from 17.77%, the bank said. Market participants expect the central bank to keep its benchmark one-week repo rate unchanged this Thursday but project a three percentage point cut in July. They see the rate falling to around 40% in September before ending the year at around 36%. A year from now, the key policy rate is estimated to be around 29%. Survey participants now expect the lira/dollar exchange rate to be 43.57 by the end of 2024, slightly below the previous forecast of 43.70. However, the 12-month ahead forecast for the exchange rate increased to 47.04, up from 46.62 in the last survey period. The Survey of Market Participants is conducted monthly. The panel consists of 72 participants, 54 of whom are experts in the financial sector and 18 of whom are experts in the real sector.
Yahoo
03-04-2025
- Business
- Yahoo
Inflation eases in Turkey although Trump tariffs pose economic risks
Turkey's annual inflation rate dropped to 38.1% in March, down from February's 39.1%, according to the Turkish Statistical Institute. This was below analyst estimates of 38.9%, while also marking the 10th consecutive month of falling inflation. It was also the lowest number since December 2021. Prices rose at a slower pace across a number of categories, such as footwear and clothing, which came in at 14.8% in March, down from 20.8% in the previous month. Transport inflation dropped to 21.6% in March, down from 23.4% in February. Household equipment and furnishings inflation slid marginally to 32.4% in March, down from 33.6% in the previous month. Similarly, health inflation dropped to 42% in March, from 43% in February, while cafe, hotels and restaurant inflation came down from 45.9% in February to 43.4% in March. Recreation and culture price rises also eased. However, non-alcoholic beverage and food inflation advanced slightly to 37.1% in March, up from 35.1% in February. Month-on-month Turkish inflation rose 2.5% in March, up from 2.3% in February. Although Turkey's inflation rate has been on a downward trajectory for the last 10 months, it is still considerably higher than most other countries. However, the Central Bank of the Republic of Turkey has already started slashing interest rates, having decreased its key rate by 250 basis points to 42.5% in early March. The country still has considerable upside risks to inflation, including the recently announced US 10% baseline tariff. With Turkish inflation already significantly high, the central bank will be carefully considering any upcoming decision which could push it higher. Related Prospects brighten as Turkey taken off money laundering 'grey list' Turkey cuts interest rate to 42.5% after inflation hits two-year low Previously, when dealing with soaring inflation, the central bank cut interest rates, an approach supported by President Recep Tayyip Erdoğan, which was completely at odds with strategies taken in other major economies. However, when this pulled the lira down and pushed inflation up, the central bank changed tack and started hiking interest rates. The European Bank for Reconstruction and Development (EBRD) estimated in its February Regional Economic Prospects report that Turkey's economy would grow by 3% this year. This echoed its forecast given in September last year. The bank also expects Turkey's gross domestic product (GDP) to hit 3.5% next year. However, the EBRD warned that geopolitical uncertainties and sticky inflation still continue to present downside risks to the Turkish economy. It also warned against rapid monetary policy loosening. 'For Türkiye, the report indicates that tighter monetary and fiscal policies have led to a significant reduction in inflation and improvements in the country's external position, with net exports rising and the current account deficit declining steadily," the EBRD said. 'However, the report warns against premature loosening of policy measures, with continued high inflation, geopolitical uncertainties and the impact of the real appreciation of the Turkish lira on export competitiveness all posing downside risks to the economy.' The country's economic outlook is also vulnerable to global financing conditions, mainly because of its high short-term external financing needs. Turkey's economic outlook is also clouded by political turmoil following the arrest of Istanbul mayor Ekrem Imamoglu, the opponent of President Tayyip Erdogan, last month. The detention sparked mass protests and critics of Erdogan are now calling for a mass commercial boycott, encouraging citizens to forgo goods and services from firms perceived as close to the president. Sign in to access your portfolio
Yahoo
03-04-2025
- Business
- Yahoo
Inflation eases in Turkey although Trump tariffs pose economic risks
Turkey's annual inflation rate dropped to 38.1% in March, down from February's 39.1%, according to the Turkish Statistical Institute. This was below analyst estimates of 38.9%, while also marking the 10th consecutive month of falling inflation. It was also the lowest number since December 2021. Prices rose at a slower pace across a number of categories, such as footwear and clothing, which came in at 14.8% in March, down from 20.8% in the previous month. Transport inflation dropped to 21.6% in March, down from 23.4% in February. Household equipment and furnishings inflation slid marginally to 32.4% in March, down from 33.6% in the previous month. Similarly, health inflation dropped to 42% in March, from 43% in February, while cafe, hotels and restaurant inflation came down from 45.9% in February to 43.4% in March. Recreation and culture price rises also eased. However, non-alcoholic beverage and food inflation advanced slightly to 37.1% in March, up from 35.1% in February. Month-on-month Turkish inflation rose 2.5% in March, up from 2.3% in February. Although Turkey's inflation rate has been on a downward trajectory for the last 10 months, it is still considerably higher than most other countries. However, the Central Bank of the Republic of Turkey has already started slashing interest rates, having decreased its key rate by 250 basis points to 42.5% in early March. The country still has considerable upside risks to inflation, including the recently announced US 10% baseline tariff. With Turkish inflation already significantly high, the central bank will be carefully considering any upcoming decision which could push it higher. Related Prospects brighten as Turkey taken off money laundering 'grey list' Turkey cuts interest rate to 42.5% after inflation hits two-year low Previously, when dealing with soaring inflation, the central bank cut interest rates, an approach supported by President Recep Tayyip Erdoğan, which was completely at odds with strategies taken in other major economies. However, when this pulled the lira down and pushed inflation up, the central bank changed tack and started hiking interest rates. The European Bank for Reconstruction and Development (EBRD) estimated in its February Regional Economic Prospects report that Turkey's economy would grow by 3% this year. This echoed its forecast given in September last year. The bank also expects Turkey's gross domestic product (GDP) to hit 3.5% next year. However, the EBRD warned that geopolitical uncertainties and sticky inflation still continue to present downside risks to the Turkish economy. It also warned against rapid monetary policy loosening. 'For Türkiye, the report indicates that tighter monetary and fiscal policies have led to a significant reduction in inflation and improvements in the country's external position, with net exports rising and the current account deficit declining steadily," the EBRD said. 'However, the report warns against premature loosening of policy measures, with continued high inflation, geopolitical uncertainties and the impact of the real appreciation of the Turkish lira on export competitiveness all posing downside risks to the economy.' The country's economic outlook is also vulnerable to global financing conditions, mainly because of its high short-term external financing needs. Turkey's economic outlook is also clouded by political turmoil following the arrest of Istanbul mayor Ekrem Imamoglu, the opponent of President Tayyip Erdogan, last month. The detention sparked mass protests and critics of Erdogan are now calling for a mass commercial boycott, encouraging citizens to forgo goods and services from firms perceived as close to the president.
