MNI BRIEF: Turkish Inflation Expectations Fall Again

Turkish household year-end inflation expectations fell from 69% in May to 67% in June, while 12-month-ahead inflation expectations declined from 67% to 63% over the same period, the Koc University Household Inflation Expectations Survey showed on Thursday.

“Survey results for June indicate that the decline in inflation expectations observed in the previous month has not only persisted but has strengthened,” the study’s authors wrote. (See MNI EM CBRT WATCH: Policy Rate Hold Seen; Cuts Resume From July)

“This trend suggests that the ‘March 19 effect’ previously detected in household expectations has largely dissipated. The fading of this effect points to a normalisation in expectation formation, as the initial reaction to the post-election policy shift appears to be subsiding among households.”

Inflation expectations for the past 12 months were unchanged at 73%. However, taken alongside the 12-month-ahead figure, it suggests households' inflation expectations have moved downwards by 10% - a change the authors attributed to "growing confidence in the disinflation path, likely supported by recent monetary tightening measures.”