Turkey: Inflation dip provides additional room for the CBRT to cut – Standard Chartered

Carla Slim, economist at Standard Chartered, notes that Turkey’s June headline inflation declined more than expected to 15.72% y/y, from 18.71% in May – the fastest deceleration in the CPI index in eight months.

Key Quotes

“Similarly, the core index fell to 14.65% in June, from 15.87%. This suggests that the long-awaited base effects have kicked in, which could provide impetus for inflation to continue declining in the coming months.”

“The June CPI print helps pave the way for the Central Bank of the Republic of Turkey (CBRT) to kickstart its easing cycle at the 25 July MPC with a 100bps cut.”

“We have been more cautious than others in our rate cut call – we see a 200bps cumulative cut in 2019 – given turbulent markets and political noise relating to the March local elections, the Istanbul mayoral re-run and the S-400 anti-missile system deliveries.”