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Turkish Lira outlook flagged as disinflation faith fades
Commerzbank said survey respondents expect only gradual rate cuts from the central bank’s current effective level, while one-year-ahead inflation forecasts have moved higher.
Commerzbank said market participants are showing less confidence in sustained disinflation and a stable lira, citing findings from a Central Bank of the Republic of Türkiye survey. The note highlighted that respondents have revised inflation forecasts higher and now expect only gradual rate cuts from current effective levels, suggesting limited belief that price pressures will cool quickly.
FXStreet reported Commerzbank’s Tatha Ghose also compared year-end and one-year-ahead USD/TRY expectations. The market is reportedly more optimistic than Commerzbank for year-end, but the one-year-ahead forecast has moved up to align with Commerzbank’s higher projection.
Ghose concluded that the survey results point to weak credibility behind a stable exchange-rate story and disinflation, because the convergence in longer-dated forecasts reflects reduced confidence.