Turkish Central Bank Reveals Higher Year-End Inflation and Dollar Forecasts

The Central Bank of the Republic of Turkey (CBRT) has just released the results of its Market Participants Survey for August, and the numbers reflect a slight shift upward in inflation and exchange rate expectations.

According to the survey, market participants now expect year-end consumer inflation (CPI) to reach 29.69%, up slightly from 29.66% in the previous month’s forecast. While this increase may seem marginal, it indicates that inflationary pressures are still lingering in the eyes of financial professionals.

Interestingly, the 12-month ahead CPI expectation actually dropped from 23.39% to 22.84%, while the 24-month forecast saw a slight decline from 17.08% to 16.92%. This suggests that although inflation concerns remain for the short term, there is still confidence that it will gradually ease over the next two years.

When it comes to the exchange rate, the year-end forecast for the USD/TRY rose to 43.96 from 43.72 in the previous survey. Looking further ahead, participants now expect the dollar to trade at 48.36 lira in 12 months, up from the earlier forecast of 47.70.

The CBRT’s monthly Market Participants Survey gathers expectations from a diverse group of 72 professionals, including 54 from the financial sector and 18 from the real economy. These results are considered a key indicator of market sentiment and provide valuable insight into where inflation and currency trends might be heading.

With both inflation and the dollar creeping upward in forecasts, it’s clear that economic uncertainties are still very much on the radar for Turkey’s financial community.