Turkey’s consumer price index (CPI) inflation officially crept up to 33.29% y/y in September from 32.95% y/y in August, the Turkish Statistical Institute (TUIK, or TurkStat) said on October 3. Official inflation stood at 44% y/y at end-2024.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

At 33%, Turkey remains in eighth place in the world inflation league.

Central bank falters on path again

TUIK also posted a monthly official inflation figure of 3.23% for September after releasing 2.04% for August, 2.06% for July, 1.37% for June, 1.53% for May and 3.00% for April.

On August 14, Turkey’s central bank raised its end-2025 official inflation "forecast" range to 25-29% in its latest quarterly inflation report.

The central bank anticipated that the seasonally-adjusted monthly inflation figures would fall below the 1.5%-level starting from 3Q25 and end the year at a little above the 1%-level.

A figure of 2.65% was released for July (revised to 2.64% with the latest release) and 2.47% was put out for August. The September reading will be released on October 6. It is supposed to come in at above the 1.5%-level.

In the coming months, TUIK is supposed to deliver further outcomes in the 1%s for the official monthly headline indicator.

Sub-30% goal for end-2025

TUIK is set to release end-2025 official inflation at around 30%. The goal is to provide a figure that stands below the 30%-level. Getting there will depend on developments in the last quarter of the year.

On November 7, the central bank will release its next and last quarterly inflation report for this year, which will include updated forecasts.

October and December cuts on horizon

On July 24, the monetary policy committee (MPC) of Turkey’s central bank revived its monetary easing cycle by delivering a 300-bp rate cut that brought the policy rate to 43%.

On September 11, it cut its main policy rate (one-week repo) further by 250 bp to 40.5%.

On October 23, the authority will hold its next rate-setting meeting. As things stand, another rate cut is almost certain. The size of the cut, though, is not certain.

Rate cuts of 300 bp made at the next two meetings would bring the one-week repo to 34.5% while 200-bp cuts would mean 36.5% at end-2025. Two more 250bp cits would deliver 35.5%.

All things being equal, the realisation will come in somewhere between 34.5% and 36.5% depending on the course of the official inflation releases.

October 24, CHP hearing

On October 24, the next hearing in a trial concerning the main opposition Republican People’s Party (CHP) national party congress held in November 2023, which is being conducted by the Ankara 42nd (Asliye Hukuk) civil court of first instance, is to be held.

Notable political events could cause market movements both before and after the hearing. Separately, company seizures continue.

The USD/TRY remains under control and Turkey's eurobond auctions have continued undeterred despite the political stress. The Borsa Istanbul fluctuates wildly while some tension has also been felt in domestic lira bonds.