Central Bank Survey: Year-End Inflation Expectation Rises, Changes in Exchange Rate and Interest Rate Forecasts

The results of the Central Bank of Turkey's (TCMB) Market Participants Survey for July showed that the participants' year-end consumer price index (CPI) expectation increased compared to the previous survey period. According to the survey, the CPI expectation rose to 29.21%.The 12-month CPI expectation also increased from 23.81% to 23.95%, while the 24-month inflation expectation decreased from 18.29% to 17.83%. The survey was conducted between July 13-16 and had 65 participants.When evaluating the probability forecasts for the next 12 months, it is predicted that the CPI will increase by 13.76% with a probability of 19.00-21.99%, by 55.85% with a probability of 22.00-24.99%, and by 20.36% with a probability of 25.00-27.99%.'Inflation expectations will play a crucial role in determining the future steps of monetary policy.'In terms of exchange rate expectations, the participants' year-end USD/TL exchange rate expectation increased from 51.47 TL in the previous survey period to 51.55 TL in this period.The 12-month exchange rate expectation was 55.72 TL in the previous period and 56.69 TL in this survey period.'The exchange rate is seen as an effective way to reflect fluctuations in the economy.'On the growth side, the participants' expectation for the 2026 gross domestic product (GDP) growth rate decreased from 3.2% in the previous survey period to 3.1% in this period.