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TURKEY: Further Moderation in CPI Could Pave Way for December Rate Cut

TURKEY
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CPI data for November is due this morning (07:00GMT/10:00 local time). As per the Bloomberg survey, headline inflation is seen moderating to 46.60% y/y from 48.58% in October. Favourable base effects are expected to drive much of the decline in the annual reading though elevated food prices will likely keep the month-on-month print near 2%. Given the dovish shift in language in the November policy statement, a benign print may open the door to a rate cut at this month’s CBRT meeting. Sell-side views can be found in the image below:

  • Goldman Sachs forecast headline inflation to decline to 46.7% y/y but remain somewhat elevated at around 2.0% m/m due to unprocessed food inflation. Goldman also forecast a notable decline in core goods inflation given TRY stability in Sept-Nov. They continue to think that the CBRT will need to see at least two inflation prints that show a notable slowdown in the monthly inflation trend and therefore expect the Bank to deliver the first rate cut in January.
  • ING note that despite temporary volatility, TRY has outperformed other EM peers in November. Given this backdrop, in addition to the ongoing effect of monetary tightening, they expect the downtrend in the annual inflation to continue with a drop to 46.6% (forecasting a 1.9% m/m increase).
  • JP Morgan expect headline inflation to be 2.0% m/m in November. Unprocessed food prices are likely to be the main driver of seasonally high print in November, they say, while annual inflation is expected to fall on the back of favourable base effects. Services and core goods prices are likely to show improvement on the monthly basis in November, which should keep core benign.
  • UniCredit expect consumer prices increase by 2.1% m/m in November and the annual print to ease to 46.9%. UniCredit note that the disinflation process will likely continue in the final month of this year and in 2025, however, they expect the pace to slow compared to the CBRT’s forecast. They note that the recent change in the CBRT’s rhetoric increased the likelihood of a rate cut in December and UniCredit therefore now think the Bank could start lowering its policy rate by 2ppts this month and to below 30% by the end of 2025.
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CPI data for November is due this morning (07:00GMT/10:00 local time). As per the Bloomberg survey, headline inflation is seen moderating to 46.60% y/y from 48.58% in October. Favourable base effects are expected to drive much of the decline in the annual reading though elevated food prices will likely keep the month-on-month print near 2%. Given the dovish shift in language in the November policy statement, a benign print may open the door to a rate cut at this month’s CBRT meeting. Sell-side views can be found in the image below:

  • Goldman Sachs forecast headline inflation to decline to 46.7% y/y but remain somewhat elevated at around 2.0% m/m due to unprocessed food inflation. Goldman also forecast a notable decline in core goods inflation given TRY stability in Sept-Nov. They continue to think that the CBRT will need to see at least two inflation prints that show a notable slowdown in the monthly inflation trend and therefore expect the Bank to deliver the first rate cut in January.
  • ING note that despite temporary volatility, TRY has outperformed other EM peers in November. Given this backdrop, in addition to the ongoing effect of monetary tightening, they expect the downtrend in the annual inflation to continue with a drop to 46.6% (forecasting a 1.9% m/m increase).
  • JP Morgan expect headline inflation to be 2.0% m/m in November. Unprocessed food prices are likely to be the main driver of seasonally high print in November, they say, while annual inflation is expected to fall on the back of favourable base effects. Services and core goods prices are likely to show improvement on the monthly basis in November, which should keep core benign.
  • UniCredit expect consumer prices increase by 2.1% m/m in November and the annual print to ease to 46.9%. UniCredit note that the disinflation process will likely continue in the final month of this year and in 2025, however, they expect the pace to slow compared to the CBRT’s forecast. They note that the recent change in the CBRT’s rhetoric increased the likelihood of a rate cut in December and UniCredit therefore now think the Bank could start lowering its policy rate by 2ppts this month and to below 30% by the end of 2025.