The Central Bank of the Republic of Türkiye (CBRT) announced that inflation expectations picked up in October, heightening concerns that the pace of disinflation may be slowing. The bank signaled that it will maintain a cautious and data-driven approach to monetary policy in the coming months.

In its latest assessment, the CBRT said that inflation expectations for year-end have risen among both market participants and households, reflecting persistent price pressures across key sectors. While global conditions remain challenging, the bank underlined that domestic risks — including food-price increases, supply bottlenecks, and rising service costs — are increasingly affecting the inflation outlook.

“The risks posed by recent price developments to the disinflation process through inflation expectations and pricing behavior have become more pronounced,” the statement noted.

The Central Bank emphasized that it would sustain a tight monetary policy stance until a clear and lasting decline in inflation is achieved. Although the bank has gradually reduced its policy rate in recent months, it has now signaled that further cuts will proceed at a slower and more cautious pace.

According to the CBRT, its interim inflation targets remain unchanged — 24 percent by the end of 2025, 16 percent in 2026, and 9 percent in 2027. The bank stressed that expectations must align with these targets to ensure lasting price stability.

Officials also highlighted that seasonal and structural factors, including higher food and education-related costs, have contributed to ongoing inflationary pressures. Energy prices and global commodity trends are also being closely monitored as potential sources of volatility.

Economic analysts note that the Central Bank’s latest message reflects its intent to safeguard the progress made in stabilizing prices and to avoid premature easing. A prolonged period of policy tightness may therefore continue until inflation and expectations begin to show a sustained downward trend. (ILKHA)