Turkey Inflation Slows, Paving Way for December Rate Cut
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Consumer inflation eased in October, raising hopes that the Turkish central bank (CBRT) may deliver another interest rate cut in December. Analysts forecast year-end inflation to remain around 30–35%, with only gradual disinflation through early 2025.
Inflation Below Expectations
Turkey’s consumer price index (CPI) rose 2.55% in October, below the market median of 2.8%, bringing annual inflation down to 32.9% from 33.3%. Core inflation (C-index) also slowed to 2.4% on a monthly basis, while annual inflation dipped to 32.1%, signaling a mild deceleration in underlying price pressures.
Şeker Investment noted that the price surge seen in August and September “appears to have been temporary.” The firm expects November inflation in the 2–2.5% range, which would allow the CBRT to cut rates by 100–150 basis points in December.
“If November inflation stabilizes near 2%, the central bank could act more assertively,” Şeker said, adding that monetary policy would weigh real interest margins and market stability before deciding.
Gedik Investment: Another Cut Likely in December
Gedik Investment analysts highlighted that October’s softer reading was driven by weaker price increases in durable and basic goods, while food and services inflation remained sticky.
Despite a drop in monthly service inflation from 4.1% to 1.8%, the annual rate held at 44.4%, indicating persistent rigidity. Gedik said, “Given the CBRT’s 100-basis-point cut in the last Monetary Policy Committee (MPC) meeting, another reduction of a similar size in December appears likely.”
The firm expects the central bank to revise its end-2025 inflation forecast upward during the November 7 Inflation Report meeting, while maintaining a gradual easing path through next year.
Akbank: Pause May Be Needed to Sustain Disinflation
Akbank’s Economic Research unit also noted that the inflation outcome was below expectations, though still above the CBRT’s upper forecast band. The bank estimates year-end inflation at around 32%, warning that sustained progress in disinflation “requires maintaining policy tightness.”
The report underlined that high food prices—unrelated to weather conditions such as drought or frost—continued to pressure the index, particularly in processed and non-perishable food categories.
Akbank added that while the Turkish lira’s depreciation had moderated since late July, price-setting behavior and inflation expectations remain unanchored, limiting the scope for aggressive rate cuts. “A temporary pause in rate reductions may be warranted to reinforce the credibility of the disinflation process,” it said.
Outlook: Flat Inflation, Limited Easing Ahead
Across institutions, a consensus has emerged: inflation will likely hover between 30–35% through year-end, with only limited improvement in core and services inflation.
Fiscal policy pressures and structural price stickiness—especially in housing, food, and transport—remain major challenges for the CBRT. Analysts see the central bank delivering a final 100–150 basis-point cut in December, closing 2025 with more cautious adjustments.
