Macro and Politics

* According to the results of the September Sectoral Inflation Expectations Survey, 12‑month ahead inflation expectations fell by 0.6pp to 22.3% for market participants, by 0.9pp to 36.8% for the real sector and by 1.1pp to 53% for households. While the decline in inflation expectations across economic agents persists, the significant dispersion among expectation levels remains evident. In line with the CBT’s guidance that it focuses on the “trajectory” rather than the “absolute level” of expectations, we view the ongoing moderation as supportive for prospective rate cuts. Yet, given our forecast that monthly CPI increases will hover around 2.5% in both September and October, we believe the CBT may consider moderating the pace of easing in the coming period. Our year-end 2025 CPI forecast stands at 29.7%, while our 12-month ahead (September 2026) CPI forecast is 21.2%.

* Foreign investors were net buyers through standard portfolio channels in the week of September 12–19, recording net inflows of USD407.6mn into the equity market and USD178mn into the bond market (excluding repo transactions). The foreign share in the total government bond stock remained unchanged at 6.6%. Moreover, the residents’ FX deposits climbed by USD534mn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) rose by USD1.2bn during the week of September 12 – 19. In terms of official reserves, the CBT’s gross FX reserves increased by USD1bn to USD179bn and net international reserves rose by USD0.8bn to USD70.3bn, while net reserves excluding swaps climbed by USD1.3bn to USD53bn.