BBVA Research Pulls Forward Expectations for Interest Rate Cut in Turkey to October
Financial institution BBVA Research has updated the central bank's rate cut schedule in line with recent inflation data and funding developments.
BBVA Research announced that, following recent consumer inflation data and funding developments, it has brought forward its expectation for an interest rate cut by the Central Bank of the Republic of Turkey from December to October.
Inflation Data and Trends
Monthly consumer inflation in Turkey rose from 1.78 percent to 1.84 percent under the influence of increases in energy, alcoholic beverages, and tobacco prices. According to the institution's calculations, seasonally adjusted monthly inflation also showed an acceleration.
Cautious Stance in Monetary Policy
It was emphasized that a cautious stance in monetary policy must be maintained due to inflation expectations not stabilizing sufficiently, persistently high services inflation, and volatile food and energy prices.
September Price Developments
While time-dependent price adjustments are projected to be one of the key determinants of inflation in September, it was evaluated that weakening demand could limit price increases.
Year-End Inflation Forecast
Provided that food and energy prices remain stable, annual consumer inflation is estimated to approach 30 percent. The institution kept its year-end 2026 inflation forecast at the 30 percent level.
Change in Interest Rate Cut Expectation
Following the faster-than-expected normalization in funding by the Central Bank of the Republic of Turkey and the latest inflation data, the institution pulled forward its previously expected 100 basis point interest rate cut from December to October.