Central Banks Are Nervous, Markets Are Waiting for Inflation Data

Inflation Report Day: Current Status Analysis

The inflation report released today was eagerly awaited by the markets. Annual CPI was recorded at %32.9 in October. In contrast to the CBRT's projected range of %25-29 for 2025, inflation has reached %28.6 since the beginning of the year. The annual increase in the goods group was %27.6, while the increase in the services group was at %44.4. Although the annual growth rate of food prices has decreased to %34.9, the food price assumption in the inflation report remained at %26.5.

Food Inflation and Market Expectations

This slight easing in food inflation might lead to upward revisions in headline inflation forecasts. For 2026, food prices are expected to be a significant factor close to the upper band. In light of these developments, investors and economists are eagerly awaiting how the pressure on food prices will shape up.

Dollar and Global Economic Developments

There is significant volatility in the currency market. The dollar fell by %0.5 to 99.674 in Asian markets. Unpublished labor data in the U.S. has caused investors to pay attention to weakness signals in private sector surveys. In particular, data indicating increased layoffs in the public and retail sectors in October are raising concerns among investors.

Fed's Interest Rate Cut Probability Increases

Chicago Fed President Austan Goolsbee emphasized caution regarding cutting interest rates due to the lack of official data on inflation. However, CME Group's FedWatch tool shows that the probability of the Fed cutting rates at its next meeting has risen to %70. This rate was %62 the previous day.

Bank of England's Interest Rate Decision

Yesterday, the Bank of England made an important interest rate decision. As expected, they decided to keep interest rates at %4. This means that the possibility of a rate cut in the meeting scheduled for December depends on Governor Andrew Bailey. Unless there are surprises before the mentioned meeting, a rate cut is expected.