Inflation expectations improve amid oil drop

Inflation expectations improve amid oil drop

ISTANBUL - Reuters
Inflation expectations improve amid oil drop

Inflation forecasts decrease with oil plunge, a Central Bank survey shows.

Oil and commodity price falls have helped bring down inflation expectations in Turkey, a Central Bank survey showed on Dec. 19, although economists expect no immediate interest rate cuts.

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

Inflation in 12 months’ time was seen at 7.21 percent, down from 7.5 percent 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 Dec. 24.

“Inflation expectations started to improve and we think that the improvement will continue on the back of collapsing commodity prices,” Özgür Altuğ, chief economist at BGC Partners, said in a note to clients.

“However, 12-month CPI inflation expectations, which are now at 7.21 percent, tell us that there is still a big credibility gap for the central bank,” he said.