03.02.2025 16:53
After the inflation figures exceeded expectations, there were comments suggesting that the Central Bank might abandon its plans for an interest rate cut. However, Citi economists announced that the possibility of the Central Bank of the Republic of Turkey (CBRT) making an interest rate cut in March is still on the table.
Citi economists stated that the possibility of the Central Bank of the Republic of Turkey (CBRT) making an interest rate cut in March is still on the agenda. In their notes, the economists expressed that the CBRT continues its disinflation strategy based on the real effective exchange rate, emphasizing that monthly inflation data, the pace of economic activity, reserve accumulation, and the portfolio preferences of domestic residents will play a significant role in shaping market perception.
SUPPORTIVE STANCE OF POLICYMAKERS AND MINIMUM WAGE INCREASE
The report also indicated that the likelihood of policymakers preferring a more supportive stance to prevent stagnation and a new minimum wage increase by mid-year are important factors that could affect appetite for assets denominated in Turkish Lira.
INFLATION EXCEEDED EXPECTATIONS
The Turkish Statistical Institute (TÜİK) announced the inflation figures for January, which constitute the first inflation data of the year. Accordingly, the change in the Consumer Price Index (CPI) in January 2025 was 5.03% compared to the previous month, 5.03% compared to December of the previous year, 42.12% compared to the same month of the previous year, and 56.35% according to twelve-month averages.
HIGHEST ANNUAL INCREASE IN EDUCATION
The main group with the least increase compared to the same month of the previous year was transportation, with an increase of 23.14%. In contrast, the main group with the highest increase compared to the same month of the previous year was education, with an increase of 99.93%.
In terms of main expenditure groups, the main group that decreased in January 2025 compared to the previous month was clothing and footwear, with a decrease of -5.17%. Conversely, the main group with the highest increase in January 2025 compared to the previous month was health, with an increase of 23.57%.
Excluding unprocessed food products, energy, alcoholic beverages, tobacco, and gold, the change in the CPI in January 2025 was 5.47% compared to the previous month, 5.47% compared to December of the previous year, 42.08% compared to the same month of the previous year, and 56.05% according to twelve-month averages.
ECONOMISTS' EXPECTATION WAS 4.29%
The expectation survey regarding January's inflation data was concluded with the participation of 20 economists. Accordingly, the average inflation expectation of economists for January was 4.29%. The inflation expectations of the economists participating in the survey ranged from a minimum of 3.75% to a maximum of 5% for January.
According to the average inflation expectation of economists for January (4.29%), it was anticipated that the annual inflation, which was 44.38% in the previous month, would decrease to 41.11%. On the other hand, the economists' inflation expectation for the end of 2025 was 27.58% as of January. The Consumer Price Index recorded an increase of 1.03% in December 2024.