CBRT May survey: Dollar, interest rate, and inflation expectations rose, growth forecast declined!

The Central Bank of the Republic of Türkiye (CBRT) has published the results of its market participants survey for May 2025. The survey revealed that expectations regarding financial indicators have changed significantly. While participants anticipate that the dollar, interest rates, and inflation will rise, they have revised their economic growth expectations downward.

UPWARD TREND IN DOLLAR/TL EXPECTATIONS

The participants' expectation for the dollar/TL exchange rate for the end of 2025 rose to 43.70 in the May survey, up from 43.60 in the April survey.

Furthermore, the 12-month ahead dollar exchange rate expectation showed a stronger increase.

The expectation, which was 45.85 in the April survey, rose to 46.62 in May. This increase indicates that a risk perception regarding an upward trend in the exchange rate persists.

INTEREST RATE EXPECTATIONS RISE SHARPLY

According to the survey, the expectation for the current month-end overnight interest rate in the BIST Repo and Reverse-Repo Market rose from 46 percent to 49 percent.

The expectation regarding the Central Bank's one-week repo auction interest rate was also revised upward. This rate, which was 42.50 percent in April, was projected at 46 percent in the May survey.

The year-end inflation forecast based on the CPI (Consumer Price Index) rose in the May survey.

Participants' year-end 2025 CPI expectation rose to 30.35 percent in May, up from 29.98 percent in April.

Conversely, the 12-month ahead inflation expectation declined, albeit slightly. This rate, measured at 25.56 percent in the April survey, fell to 25.06 percent in May.

The 24-month ahead inflation forecast rose from 17.69 percent to 17.77 percent, signaling a slight increase in long-term inflation perception.

GROWTH EXPECTATIONS ON THE DECLINE

Another notable development in the survey was the decline in growth expectations.

The Gross Domestic Product (GDP) growth expectation for 2025 fell to 2.93 percent in May from 3.04 percent in April.

Similarly, the GDP growth forecast for 2026 also declined from 3.80 percent to 3.73 percent.