HighIV Macro Policy & Sovereign Debt5 October 2026, Monday · 10:00 TRT (UTC+3)
Softer September inflation puts a rate cut on the table
Annual inflation fell from 31.51% to 29.73% in September, according to TurkStat data released on 5 October, with prices up 1.84% on the month. The annual rate is below 30% for the first time since November 2021.
TurkStat data reported by Habertürk show food and non-alcoholic beverage prices fell 0.20% on the month in September, pulling the headline down. Housing, water, electricity and gas rose 2.71% on the month and 39.99% on the year. Transport was the fastest-rising main group at 2.79% on the month, up 35.10% on the year. Domestic producer prices rose 27.38% on the year and 2.07% on the month.
The source of the headline decline is narrow. According to Daily Sabah, the core C index, which excludes unprocessed food, energy, alcohol, tobacco and gold, rose 2.14% on the month, above the headline. Annual core C eased to 28.70%. Without the seasonal easing in food, energy- and services-driven price pressure would have been more visible in the monthly picture. Treasury and Finance Minister Mehmet Şimşek credited regulatory measures for the decline but singled out pressure in transport.
On monetary policy, the constraint shows up in the numbers. According to Trading Economics, the CBRT held its policy rate at 37% for a fifth straight meeting on 10 September; the next meeting is on 22 October. Tradingpedia reported on 6 October that a Commerzbank analyst expects a 100 basis point cut this month. The same analyst wrote that the lira is being propped up by central bank and state bank intervention. In his view, a cut and inflation that could re-accelerate towards year-end will keep the currency under pressure.
Talay assessment
Bottom line
The headline slipped below the 30% threshold, but food did the work; core C rose 2.14% on the month, above the headline. That gives the CBRT grounds to cut on 22 October, while energy and housing limit the pace of any cut. The most likely path is a modest cut. But intervention propping up the lira and high oil prices leave the durability of easing in doubt.
Likely effects
- Monetary policyPositiveWeeks
The headline falling below 30% and a softer-than-expected monthly print give grounds to end five meetings on hold at the 22 October meeting.
- Turkish liraNegative1–6 months
According to the analyst, the currency is being supported by intervention. A rate cut could erode real returns on lira assets and increase pressure on the exchange rate.
- Household costsNegative1–6 months
A 39.99% annual rise in housing and energy shows rent and utility burdens are not easing, even as the headline falls.
Possibilities, ranked
- 1Measured cut55%
The CBRT trims its policy rate modestly on 22 October and keeps its emphasis on a tight stance.
Watch: The 22 October MPC decision and its assessment of the underlying trend
- 2One more meeting on hold30%
Core inflation and reserve losses lead the bank to keep the rate at 37% once more.
Watch: Early-October weekly reserve data and exchange rate volatility
- 3Rapid easing15%
The bank accelerates the easing cycle with a bigger cut than expected.
Watch: A marked fall in 12-month-ahead expectations in the October inflation expectations survey
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Annual CPI (September)▼ 29.73%
- Monthly CPI (September)▲ 1.84%
- Core C, monthly▲ 2.14%
- Housing group, annual▲ 39.99%