Türkiye will stick to its push to bring down inflation, with the country's finance minister pointing to temporary factors for a loss of momentum on the disinflation path, according to the president of the European Bank for Reconstruction and Development (EBRD).
Odile Renaud-Basso, just returned from the International Monetary Fund (IMF) and World Bank annual meetings in Washington, DC, said she had discussed inflation pressures with Türkiye's Treasury and Finance Minister Mehmet Şimşek.
"He explained there is a bit of temporary factors, like the impact of drought ... and specific factors that could have (an impact)," Renaud-Basso told Reuters on Monday.
"But I think the objective to decrease inflation will remain on track – these objectives are not going to change, they are going to keep the policy course."
Türkiye's inflation rate in September came in higher than expected at 33.3%, marking the first annual rise since a peak of 75.4% in May last year. Monthly readings were also higher than expected.
The country's central bank is expected to slow the pace of its interest rate cuts when its policymakers meet on Thursday, according to surveys.
Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan and his two deputies were also in Washington, meeting with investors over the past week.
They told foreign investors that they were increasingly concerned about inflation – suggesting they were ready to slow down the pace of rate cuts, sources told Reuters.
The bank lowered its benchmark one-week repo rate by 250 and 300 basis points in September and July, respectively.
Economists expect it to deliver a 100 basis-point cut this week to 39.5%, according to surveys by Anadolu Agency (AA) and Reuters.
JPMorgan on Monday reduced its forecast for the rate cut and revised its inflation outlook higher, warning that domestic political developments posed upside risks for both benchmark rates and price pressures.
The Wall Street bank said it now expected the central bank to lower its one-week repo rate by 100 basis points rather than 150 bps.
It added it expected policymakers to cut rates by 100 bps in December and in each monetary policy committee meeting in 2026, which would see the key rate end 2026 at 30.5%.
Meanwhile, the bank revised its year-end inflation forecast up to 32% from a previous 31.5%.
"We see upside risks to our inflation and policy rate forecasts for 2025 and 2026 due to domestic political developments," said Fatih Akçelik at JPMorgan.
The CBRT estimates inflation will drop to about 24% by the end of the year, with a forecast range of 25%-29%. The government's newly updated medium-term program expects it to slow to 28.5% this year.
