Central Bank raises year-end inflation and dollar forecast

The Central Bank of the Republic of Turkey (TCMB) released its July market participants survey, showing that respondents raised their year-end inflation and dollar exchange rate forecasts. The survey reflects expectations for the Turkish lira's depreciation and persistent price pressures. The data comes amid the central bank's ongoing monetary tightening cycle aimed at curbing inflation, which remains elevated. The revised forecasts indicate market skepticism about the pace of disinflation. The survey also includes expectations for GDP growth and interest rates. The central bank has been raising its policy rate to combat inflation, but the lira continues to weaken.

Global Impact

Economically, Turkey's persistent inflation and currency weakness contribute to emerging market volatility, particularly for currencies in similar macroeconomic positions. Politically, the government faces pressure to maintain growth while controlling inflation, which may lead to policy tensions.