Turkey's annual inflation rate cooled more sharply than economists predicted in March, dropping to 30.9% year-on-year according to official data. This beats the February figure of 31.5% and significantly undershoots the Bloomberg survey median forecast of 31.4%. Monthly inflation also eased faster than anticipated, falling to 1.94% from February's 2.96%, well below the 2.34% expected.

Turkish assets showed only moderate reactions, with the Borsa Istanbul Banks Index briefly gaining before reversing losses and 10-year bonds rising as yields fell 14 basis points. The lira held relatively steady, declining just 0.3% against the dollar at 44.59, despite pressure from the broader emerging market selloff triggered by the Iran conflict. Transportation costs surged 4.52% last month, reflecting the war's impact on energy prices, even as the central bank intervened to stabilize the lira. The central bank paused its rate-cutting cycle, instead delivering a veiled hike and maintaining tight policy to support disinflation. The lira's stability is crucial, though markets expect the year-end inflation target of 16% to be missed by a wide margin, around 27%.