Turkish inflation continued to slow in September, raising the prospect of an interest rate cut at the next central bank meeting to help ease liquidity strains stemming from a domestic funds crisis.
Annual consumer price growth decelerated for a fourth straight month to 29.7% from 31.5% in August, Turk Stat said on Monday. The median estimate among 18 economists surveyed by Bloomberg was 30.3%. Monthly price growth was 1.84%, the same as in August and below the median forecast of 2.28% in a separate Bloomberg survey of 17 analysts. Transportation, education and housing prices were among the biggest contributors to the monthly gains.
Turkish stocks extended gains following the data release, led by a surge in banking shares. The BIST Banks Index rose as much as 2.8%, in a sign of increased bets that borrowing costs will come down. Lira bonds also rose, with the yield on two-year bonds falling 36 basis points to 39.49%. The lira was little changed, trading at 49.16 per the US dollar at 10:32 a.m. in Istanbul.
Although high oil prices caused by the Iran war have sustained inflationary pressures in energy-importing Turkey, they've been somewhat offset by cooling consumer demand, slowing economic activity and suppressed market liquidity following a recent funds scandal — factors that have strengthened the case for a rate cut at the Fatih Karahan-led central bank's October 22 meeting. "The simultaneous improvement in headline and core inflation makes today's print more encouraging," said Tufan Comert, executive director of global markets strategy at BBVA.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing