Morgan Stanley Lowers Turkiye’s Inflation Forecast to 42.4%

Analysts cite unexpected Turkiye’s June inflation decline and Central Bank’s cautious stance in revised outlook.

Morgan Stanley has revised down Turkiye’s year-end 2024 inflation forecast from 43.4% to 42.4%. In a note titled “A Promising Start to Inflation Control,” authored by Morgan Stanley Economist Hande Kucuk, it was noted that June inflation in Turkiye unexpectedly declined, marking a faster-than-expected start to disinflation.

The note highlights a significant decrease in monthly inflation in line with the long-standing projections of the Central Bank of the Republic of Turkiye (CBRT).

Despite the slowdown in headline inflation, service inflation continues to maintain a high trajectory, keeping upward price risks alive, the note added.

“We expect the CBRT to maintain its tight stance,” stated Morgan Stanley in its note, forecasting a monthly decline in seasonally adjusted consumer price index to 2% and core consumer price index to 1.9%.

Additionally, considering public sector price increases and the positive June report, Morgan Stanley adjusted down their year-end 2024 inflation forecast from the previous 43.4% to 42.4%.

The note concludes by highlighting downward risks related to inflation outlook and expects the CBRT to maintain its tight stance with no changes in interest rates this year.

Source: Bloomberght / Prepared by Irem Yildiz

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