Macro and Politics

* The CBT will release the February Sectoral Inflation Expectations survey @ 10:00 local time. According to the CBT’s January Sectoral Inflation Expectations Survey, 12-month-ahead annual inflation expectations declined by 1.15 percentage points to 22.2% for market participants and by 1.9 percentage points to 32.9% for the real sector compared to the previous month. In contrast, household inflation expectations increased by 1.18 percentage points to 52.08%. While the overall trajectory has been broadly downward since the beginning of 2024, the pronounced divergence across segments remains intact. The current configuration suggests that economic agents continue to display a backward-looking and adaptive expectations formation process, reacting sensitively to recent inflation realizations. We expect the gradual easing trend in sectoral expectations to persist in the period ahead. Moreover, the CBT announced that it will begin publishing the results of the Household Expectations Survey (HES) as of today. According to the statement, the survey aims to provide a broader assessment of households’ expectations regarding inflation, the exchange rate and housing prices, and will be conducted in cooperation with TURKSTAT. Starting January 2026, 12-month-ahead household inflation expectations in the Sectoral Inflation Expectations (SIE) release will be derived from HES data, replacing the Consumer Tendency Survey series. The first SIE publication reflecting this change will be released on today.