Inflation rate may drop to 39-year low

Bloomberg

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Inflation eased to 5 percent from 6.1 percent in April, according to the median estimate of 11 economists surveyed by Bloomberg. The statistics agency will announce the data at 5 p.m. in Ankara on Wednesday. The rate would be the lowest since July 1970.

The Central Bank has cut 7.5 percentage points from the benchmark rate in sixth months as it tries to limit an economic contraction that the government forecasts at 3.6 percent this year. The benchmark rate is 9.25 percent, a record low, and the bank said on May 27 that it may need to maintain its easing bias for "some time."

"We’ll see the Bank take the rate as low as 8.5 percent in the next couple of months and it’ll stop there to see how inflation goes," said Hakan Aklar, an economist for AK Yatırım in Istanbul. "Inflation may fall to about four percent by October, but after that it will start rising again."