Critical Analysis of Turkey's Economy and Inflation by Citi

Important Assessments of the Turkish Economy from Citibank

Citibank has published a comprehensive report on Turkey's economic situation. Citi economists Gültekin Işıklar and İlker Domaç evaluated developments in the Turkish economy following the release of inflation data for October.

October Inflation and Interest Rate Cuts

In October, inflation in Turkey was recorded at %2.55 on a monthly basis and %32.87 on an annual basis. In the same month, the CBRT reduced its policy rate from %40.5 to %39.5.

Future Predictions

The report predicts that inflation will decrease to %32 by the end of the year. Additionally, the CBRT is expected to continue lowering the policy rate. The report highlights that core inflation remains at %32.1 and service inflation at %44.4. It is stated that developments in food and accommodation prices will significantly affect the disinflation process.

Expectations for the Disinflation Process

Citi indicates that the CBRT's inflation targets for the years 2025 and 2026 are %24 and %16, respectively, but sectoral expectations do not support these targets. This situation suggests that the disinflation process will occur more slowly.

Year-End Interest Rate Expectations

Economists predict that the CBRT will reduce the policy rate to %38.5 by the end of the year. The report emphasizes that monetary policy steps will be shaped for the purposes of internal demand balance and price stability.