A note titled “Good start to the fight against inflation” by Morgan Stanley economist Hande Kücük noted that Turkey’s inflation rate surprisingly fell in June, with disinflation starting to decline sooner than expected.
The published note stated that monthly inflation had decreased significantly, in line with long-standing projections of the Central Bank of the Republic of Turkey.
However, despite the slowdown in headline inflation, services inflation remains elevated and upside risks remain due to rising prices, it said.
Morgan Stanley said in a note that it expects Turkey’s seasonally adjusted consumer price index to fall 2% monthly, while its core consumer price index will fall 1.9% monthly.
Meanwhile, Morgan Stanley said it had lowered its inflation forecast for the end of 2024 to 42.4% from 43.4% a year earlier, taking into account public sector price increases and a June report that showed higher-than-expected inflation.
Finally, the note noted that given the risks to the inflation outlook, the CBRT is expected to maintain a tight stance, with downside risks to its forecast that interest rates will remain unchanged this year.
