Barclays said that the September inflation figures announced by the Turkish Statistical Institute (TÜİK) yesterday were disappointing and that if the October data comes in a similar manner, the interest rate cut expectations from the TCMB may be postponed.

In its investor note, Barclays said, “The September CPI data of 3.0% on a monthly basis was a negative surprise. Our base case is that the first interest rate cut will be 250 bp in November. However, if the October CPI data is not satisfactory either (i.e. above 2% monthly), we think the TCMB may consider postponing the first interest rate cut to December or January.”

Stating that they expect a better inflation performance in the fourth quarter of 2024 after the disappointing September data, Barclays pointed out that the September inflation data was the first deterioration in the trend indicator since April. “Whether this is a one-off or a permanent deterioration will become clearer in the coming months. We believe that this was a one-off disruption and that the lagged effect of the energy price increases in July and the high volatility in the TL in August negatively affected the September CPI,” Barclays said, emphasizing that they do not expect this situation to continue in the fourth quarter due to the slow economic activity, the fact that credit growth is still under control and the TL has returned to a stable trend since September.

However, Barclays also made the assessment that “if the October CPI data is disappointing, the TCMB may consider postponing the first interest rate cut,” and said, “The TCMB may consider postponing the first interest rate cut to December or January. When the TCMB starts to cut interest rates, we expect it to keep financial conditions tight by keeping credit growth at restrictive levels and sterilizing excess TL liquidity.”