Turkish inflation expectations for households remained unchanged at 59.3% for the next 12 months in April, while businesses and market participants saw an uptick in their inflation outlook, according to central bank data released on Friday.
Expectations for the real sector rose by 0.6 percentage points to 41.7%, while market participants’ views climbed by one percentage point to 25.6%, signaling heightened concerns about inflation.
In response to rising inflation expectations, the central bank reversed its policy easing cycle, raising the policy rate to 46% from 42.5%. This follows a selloff in the lira and other Turkish assets caused by the arrest of Istanbul’s mayor last month.
The central bank cited that “inflation expectations and pricing behavior continue to pose risks to the disinflation process” in its decision.
Annual inflation slowed to 38.1% in March, and the central bank anticipates it will hit 24% by the end of the year.
