Disinflation

Türkiye is in a period of reducing uncertainties to a minimum, Vice President Cevdet Yılmaz has stated, stressing that the country continues to ensure predictability, sustainability and confidence.

The decline in annual inflation continued for a fourth month in a row, easing from 51.97 percent in August to 49.38 percent in September, data from the Turkish Statistical Institute (TÜİK) showed on Oct. 3.

This marked the lowest annual inflation rate since July 2023.

Consumer prices advanced 2.97 percent month-on-month after rising 2.47 percent in August.

Türkiye's economic program is working, producing results, while risks are declining, Vice President Cevdet Yılmaz has said.

In an interview with private broadcaster CNN Türk, Yılmaz noted that the international rating companies upgraded the country's ratings, while Türkiye's credit default swaps (CDS) have been falling.

In a widely expected move, Türkiye's Central Bank has left its policy rate unchanged at 50 percent for the sixth month in a row.

In a statement released after the Monetary Policy Committee meeting on Sept. 19, the bank reiterated that it remains highly attentive to inflation risks.

Inflation expectations of households, companies and experts continue to differ significantly, a Central Bank survey has shown.

Households' 12-month ahead inflation expectations increased from 71.98 percent in July to 73.14 in August, which marked the highest level in households' inflation expectations since May.

Turkey's central bank held interest rates steady at 50% for a fifth straight month on Tuesday, as expected, and repeated that it remains vigilant to inflation risks even as it expects disinflation to gain pace.

The Central Bank has kept its year-end inflation forecasts for 2024, 2025 and 2026 unchanged, vowing to maintain its cautious stance in monetary policy.

The bank projects that inflation will fall to 38 percent at the end of 2024, while its forecasts for 2025 and 2026 are 14 percent and 9 percent, respectively.

Investors and analysts will carefully listen to what the Central Bank has to say about inflation dynamics and the course of its monetary policy going forward when Governor Fatih Karahan unveils the bank's quarterly Inflation Report on Aug. 8.

The report will include the bank's inflation forecasts for this year and next.

The current course of inflation is in line with their projections, Finance Minister Mehmet Şimşek has said.

"We believe that we will close the year with an inflation rate of around 40 percent," Şimşek said in an interview on Aug. 6 with private broadcaster A Haber.

Türkiye's annual consumer inflation significantly cooled to a nine-month low of 61.78% this July, below economists' forecasts, according to official data released on Monday.

Headline inflation decreased for the second consecutive month in July from 71.60% in June, the Turkish Statistical Institute (TurkStat) data showed.