Türkiye's Inflation Rate Declines to 47.1% in November
In November, Türkiye's annual consumer price inflation decreased to 47.09%, down from 48.58% in October, according to official data released by the Turkish Statistical Institute. The monthly inflation rate also saw a decline, falling to 2.24% from 2.88% the previous month. This reduction in inflation marks a significant shift in Türkiye's economic landscape, which has been grappling with high inflation rates for an extended period.
The domestic producer price index, however, showed a different trend, rising by 0.66% on a monthly basis and 29.47% annually. This disparity highlights the ongoing challenges within the Turkish economy, particularly in the production sector.
Potential Interest Rate Cuts on the Horizon
The recent decline in inflation could set the stage for Türkiye's central bank to consider cutting its interest rate, which currently stands at 50%. Central bank governor Fatih Karahan has indicated that improving inflation expectations may soon justify a rate cut. Onur Ilgen, head of treasury at MUFG Bank Turkey, noted that despite the inflation data being slightly above expectations, it is unlikely to impede the anticipated start of a rate cut cycle.
Ilgen expressed optimism, stating, "We maintain our expectations for a rate cut this month." A reduction in borrowing costs is expected to provide a much-needed boost to Türkiye's economy, particularly as it has entered a technical recession, defined by two consecutive quarters of economic contraction in the third quarter of this year.