Ozgur Altug Comments: Inflation hopes rise for Turkey

ISTANBUL: Oil and commodity price falls have helped bring down inflation expectations in Turkey, a central bank survey showed yesterday, although economists expect no immediate interest rate cuts.

The average forecast for year-end inflation fell to 9.02 per cent from November’s 9.22pc in the bank’s monthly survey of business leaders’ and economists’ expectations.

Inflation in 12 months’ time was seen at 7.21pc, down from 7.5pc in last month’s survey.

But despite the optimism, only one of 18 economists in a Reuters poll expect the central bank to cut interest rates at its policy meeting on December 24.

‘Inflation expectations started to improve and we think that the improvement will continue on the back of collapsing commodity prices,’ Ozgur Altug, chief economist at BGC Partners, said in a note to clients.

‘However, 12-month consumer price index inflation expectations, which are now at 7.21pc, tell us that there is still a big credibility gap for the central bank,’ he said.