Inflation expectations rise in Türkiye, adding pressure to policy outlook

Türkiye’s annual inflation expectations rose in April for both market participants and the real sector, while remaining unchanged for households, the Central Bank of the Republic of Türkiye reported on Friday.

According to the April 2025 Sectoral Inflation Expectations report, 12-month forward inflation expectations increased by 1 percentage point to 25.6% among market participants and by 0.6 percentage points to 41.7% for the real sector. Household expectations remained unchanged at 59.3%.

The share of households expecting inflation to decline over the next 12 months fell by 4.1 percentage points compared to the previous month, reaching 27.2%.

Türkiye halts rate cuts amid lingering price challenges

Türkiye’s annual inflation extended its downward trend for the 10th consecutive month in March, falling to 38.1%.

According to official data released by the Turkish Statistical Institute (TurkStat), monthly inflation rose slightly to 2.46%, up from 2.27% in February. This increase is primarily driven by price hikes in alcoholic beverages and tobacco, food and non-alcoholic beverages, and education spending.

Meanwhile, the central bank ended its rate-cut cycle in April meeting, which began in December and continued over three consecutive meetings, with each delivering a 250 basis-point reduction—bringing the policy rate down from 50% to 42.5%.

In its latest decision, the CBRT reversed course and raised the policy rate by 350 basis points to 46%, citing persistent inflationary pressures driven by strong domestic demand and intensified global uncertainties in April.