Inflation targeting

The European Central Bank is expected to cut interest rates again this week as inflation drifts back down towards its two-percent target, but policymakers will likely stay tight-lipped on future moves.

The ECB began raising rates sharply in mid-2022 to throttle surging consumer prices but has begun to ease the pressure as inflation rates have fallen.

President Recep Tayyip Erdoğan has voiced his "full confidence and support" for the medium-term program that was unveiled on Sept. 5.

The government will continue to work tirelessly to achieve the goals set out in the program to increase the welfare of citizens and to ensure the sustainability of our economy for our future generations, Erdoğan said.

Inflation in Türkiye is expected to fall to around 24 percent next year, according to a report released by the International Monetary Fund (IMF) on Wednesday.

"In the medium term, a further drop in inflation would boost confidence, and growth would rise back toward potential of 3.5-4 percent," the IMF said in its 2024 Article IV Mission.

Chinese consumer inflation rose more than expected in July to hit a five-month high, data showed on Aug. 9, providing some much-needed positive news on the world's number-two economy.

The reading comes as authorities struggle to kickstart activity among the country's army of consumers, with officials last week issuing a set of directives aimed at boosting buying.

A weak eurozone economy may drag inflation below the European Central Bank's 2% target, ECB policymaker and Bank of Greece Governor Yannis Stournaras said in an interview published on Thursday, reaffirming his expectation for two interest rate cuts this year.

Businesses appear to be more optimistic about the inflation outlook than households, a survey by the Central Bank has shown.

The real sector's 12-month expectations declined by 1.2 points to 55 percent, while households' expectations rose by 0.5 points to 72 percent in July.

Members of the European Central Bank (ECB) expressed confidence that inflation across the Eurozone would continue to decline, though concerns lingered following last month's rate cut amid unexpected economic setbacks, according to minutes from the ECB's latest meeting published by Reuters on Thursday.

The eurozone's annual rate of inflation cooled in June in line with analysts' expectations thanks to a slowdown in food and energy price rises, official data showed .

The European Central Bank will welcome the slowdown in inflation again but the rate has remained stubbornly above the Frankfurt-based body's 2 percent target.

Türkiye's Central Bank will meet later this week to decide about its policy rate, the one-week repo auction rate.

Most economists expect the bank to keep its key rate steady at 50 percent when members of the Monetary Policy Committee (MPC) meet on June 27.

The market is beginning to believe that the government's economic program will bring inflation down, Finance Minister Mehmet Şimşek has said.

"Inflation may be around low 40s or high 30s later this year, and next year it might be around mid-10s and then will decline to single digits," Şimsek said at event in London organized by the Chatham House, a think tank.