Household and business inflation expectations fall

ISTANBUL

Households and the real sector lowered their 12-month-ahead inflation expectations in September, a Central Bank survey has shown.

Household expectations dropped by 1.08 percentage points to 52.99 percent, while the real sector’s outlook eased by 0.9 points to 36.80 percent compared with the previous month.

The share of households expecting inflation to decline over the next year also slipped slightly, down 0.20 points to 27.35 percent, according to the bank’s Sectoral Inflation Expectations Survey on Sept. 25.

Market participants also revised their outlook downward. Their 12-month-ahead inflation expectations decreased by 0.59 points to 22.25 percent.

The latest official data showed Türkiye’s annual inflation rate fell to 32.95 percent in August, with consumer prices rising 2.04 percent on a monthly basis.

Meanwhile, Central Bank Governor Fatih Karahan delivered a presentation titled “Monetary Policy and Inflation Outlook in Türkiye” at the 17th Türkiye Investment Conference in New York, jointly organized by the Foreign Economic Relations Board (DEİK), the Türkiye-U.S. Business Council and J.P. Morgan Chase Bank, with the participation of over 200 portfolio managers and investors.

Karahan underlined that the tight monetary policy stance will be maintained until price stability is achieved, stressing that this approach will strengthen the disinflation process through demand, exchange rate and expectation channels. He noted that the macroeconomic framework outlined in the medium-term program (OVP) would support this process.

He emphasized that the Monetary Policy Committee (MPC) will set the policy rate by considering realized and expected inflation, as well as its underlying trend, in a way that ensures the tightness required by the projected disinflation path in line with interim targets.

The step size of rate decisions will be reviewed prudently on a meeting-by-meeting basis with a focus on the inflation outlook, he said, adding that the monetary stance would be tightened further if there is a significant deviation from interim targets.

The Central Bank on Sept. 11 lowered its policy rate by 250 basis points, more than markets expected. The benchmark one-week repo rate was cut from 43 percent to 40.5 percent, while markets had anticipated a 200 basis point reduction.