1 week Ago By Bloomberg
(Bloomberg) -- Turkey’s inflation rate fell more than expected last month, potentially making it easier for the central bank to cut interests rate again. Most Read from Bloomberg Prices rose by an annual 44.4% in December from 47.
1% in November. The median estimate in a Bloomberg survey of analysts was 45.2%.
Month-on-on-month inflation, the central bank’s preferred gauge, was 1.03%, compared with 2.24% in November, the country’s main statistics agency said on Friday.
The average estimate in the Bloomberg survey was 1.60%. The data follows the central bank cutting rates on Dec.
26 in its first such move in almost two years. It lowered its benchmark one-week repo rate by 250 basis points, more than markets expected, even as it maintained a hawkish stance by narrowing the difference between its lending and borrowing rates. It said it would remain cautious about future moves and signaled there was no guarantee it would continue to ease monetary policy at the same pace this year.
Still, many economists predict it will carry on lowering the main rate by 250 basis points at each of its next few Monetary Policy Committee meetings. The next one is on Jan. 23.
Turkey has suffered from one of the world’s highest inflation rates for years, caused in large part by President Recep Tayyip Erdogan championing ultra-loose monetary policy in a bid to boost growth. That changed in mid-2023, when the central bank, under a new leadership, started raising rates rapidly. Inflation has slowed from over 75% in March.
Erdogan, who had been unusually quiet about monetary policy since allowing for the more orthodox approach, on Saturday said that rates would “definitely” be reduced in 2025. His comments could increase the pressure on the central bank to ease policy further. Many Turkish business leaders have complained that rates are too high and the economy entered a technical recession in the third quarter.
The course of prices in the first months of the year will be decisive in determining the degree of interest-rate cuts. Recent fiscal-policy moves may support the central bank’s aims. In late December, the government raised the minimum wage by 30% for this year, far less than for 2024.
Seasonally-adjusted prices, also closely watched by policymakers, will be released on Monday..
