MNI BRIEF: CBRT Inflation Report Confirms Improving Outlook

Headline inflation projections for 2025, 2026 and 2027 are unchanged despite higher food prices leading to an overshoot this year, the Central Bank of the Republic of Turkey said in its November Inflation Report, with growth demand and credit growth at disinflationary levels. (See MNI EM CBRT WATCH: Cuts 150 Bp, Underlines Continued Tight Policy)

Weak global risk appetite led to a deceleration of inflows into Turkish Lira-denominated assets, but the CBRT’s reserves have continued their strong recovery, with gross international reserves standing at USD 185.5 billion by late October.

The CBRT said it will maintain a tight monetary policy stance until price stability is achieved, with fiscal coordination set to continue. Market participants continue to demonstrate a “significant”, information rigidity when forming their inflation expectations, the Bank said, resulting in a “significant pessimistic bias in the face of higher-than-expected inflation surprises.”