Global markets react to US inflation and Fed rate expectations

Global financial markets are reacting to US inflation data and anticipation of the Federal Reserve’s upcoming monetary policy decision. US Consumer Price Index (CPI) data showed annual inflation at 3.4%, aligning with expectations, while core inflation rose slightly above forecasts. This has led to increased market speculation regarding interest rate hikes, with some analysts at TD Securities now predicting three rate increases starting in September.

In the commodities market, gold prices have surged following the inflation reports, with ounce prices approaching the $4,400 mark. Analysts suggest that geopolitical tensions in the Middle East and energy price volatility continue to drive precious metal demand.

In Turkey, the banking sector is seeing a divergence in interest rates; while 1-3 month TL deposit rates have fallen to approximately 37.3%, consumer and commercial loan rates have trended upward. Regarding currency forecasts, market evaluations suggest significant volatility for the Euro/TL pair, with some long-term scenarios projecting levels between 63 and 65 TL by 2026. Meanwhile, Morgan Stanley maintains a positive outlook on carry trade operations for the Turkish Lira, suggesting the Central Bank of the Republic of Türkiye has room for approximately 250 basis points of interest rate cuts by year-end.