Turkey July year-end inflation estimate falls to 29.66%

Turkey July year-end inflation estimate falls to 29.66%

Turkey's July year-end inflation estimate has fallen to 29.66%, marking a significant decline from the previous period. This downward trend is largely attributed to the Central Bank of the Republic of Türkiye's (CBRT) anticipated rate cuts and the overall disinflationary trends observed in the country.

The CBRT's upcoming interest rate decision is expected to kick off a new rate-cutting cycle, with analysts forecasting a 250 basis-point reduction to 43.50% [2]. This move is in line with the central bank's strategy to maintain a tight monetary stance despite the recent temporary surge in monthly inflation due to administered price adjustments.

The latest inflation data indicates that monthly inflation in June was 1.37%, with price declines in key categories such as food and beverages reinforcing the central bank's view that a disinflation trend is taking hold [2]. This improvement is a result of aggressive monetary tightening since mid-2023, combined with favorable energy prices, which have helped reduce annual inflation by more than half over the past year.

The CBRT's rate-cutting cycle is expected to continue through at least the third quarter of 2026, with the policy rate falling to 36% by the end of 2025 [2]. This easing cycle aims to support economic growth while maintaining price stability.

The Turkish economy is closely watched by investors and financial professionals due to its recent volatility. The stabilization of markets following the jailing of Istanbul Mayor Ekrem Imamoğlu and the subsequent reversal of the earlier easing cycle has been instrumental in bringing inflation under control. The latest developments indicate that the CBRT's monetary policy is poised to continue supporting economic recovery and price stability.

References:
[1] https://tradingeconomics.com/country-list/inflation-rate?continent=g20
[2] https://www.dailysabah.com/business/economy/cbrt-seen-kicking-off-new-rate-cut-cycle-amid-cooling-prices