Turkey Inflation Falls to 31.1%, Opening Door for Rate Cut

Surprise Slowdown in Turkish Inflation Opens Door for Interest-Rate Cut

Turkey's inflation cooled more than expected in November, creating room for the central bank to deliver a larger rate cut at its meeting next week.

Inflation Data Analysis

According to data from the Turkish Statistical Institute, annual inflation eased to 31.1% from 32.9% in October — below all forecasts in a Bloomberg survey (median estimate: 31.6%).

Monthly inflation also dropped sharply to 0.9% from 2.6%, falling below 1% for the first time since May 2023.

Economists attribute the slowdown to a correction in food prices after sharp increases in previous months.

Market Reaction

Following the release, Turkey's banking index rose 1.6%, while the lira remained stable at 42.45 per US dollar.

Analysts say the softer reading strengthens the case for continued monetary easing. The central bank cut rates by 100 basis points in October to 39.5%, down from a peak of 50%.

Monetary Policy Outlook

Some economists see potential for a larger cut on December 11, though a possible bounce in December inflation may prevent overly aggressive easing.

Economic Context

Turkey's economy showed mixed signals in Q3 — weaker-than-expected annual growth but stronger quarterly performance — adding uncertainty to the central bank's next move.

Still, many analysts expect the monetary easing cycle to continue.