The Central Bank of the Republic of Turkey's June Market Participants Survey indicated an upward revision in the year-end inflation expectation. The year-end increase expectation for the Consumer Price Index rose from 28.94% to 29.14%.
The survey, conducted with 68 participants including representatives from the real sector, financial sector, and professionals, showed mixed short-term inflation forecast movements both upward and downward.
Mixed Short-Term CPI Expectations
The expected CPI increase for June fell from 1.52% in the previous survey to 1.36%. While the year-end inflation expectation rose, the 12-month ahead expectation slightly decreased from 23.82% to 23.81%.
The 24-month ahead CPI expectation also declined from 18.43% to 18.29%. This indicates that participants foresee only a very limited improvement in inflation in the medium term.
Updated Dollar/TRY and Current Account Expectations
The year-end dollar/TRY expectation was revised down from 51.5711 to 51.4692. However, the 12-month ahead dollar/TRY forecast increased from 54.6923 to 55.7196.
The current account deficit expectation was also revised upward. The year-end current account deficit forecast rose from 47.8 billion dollars to 49.2 billion dollars, and the expectation for next year increased from 41.6 billion dollars to 42.5 billion dollars.
Growth Expectation Slightly Weakened
According to the survey, the gross domestic product growth expectation for the current year decreased from 3.3% to 3.2%. The growth expectation for next year remained steady at 4.1%.
Participants' policy interest rate expectations were also included in the survey. The expectation for the first meeting was 37%, for the second meeting 37%, and for the third meeting 36.34%.
The 12-month ahead policy interest rate expectation declined to 30.14%. This outlook suggests that the market anticipates a more cautious path on interest rates in the second half of the year.
