Turkey’s Central Bank Governor Upbeat on Inflation as Banks Redraw Rate Path

Turkey’s central bank Governor Fatih Karahan struck an optimistic note on the inflation outlook following worse-than-expected data and market turmoil, suggesting investors may have been too hasty in reducing their forecasts for interest-rate cuts.

An unexpected court order against the main opposition party on Tuesday — which triggered a broad selloff in Turkish assets — was followed by the release of higher-than-expected August inflation data the next morning. The combination had Wall Street banks swiftly redrawing their predictions for a new rate-cutting cycle, anticipating a less severe reduction when policymakers meet on Sept. 11.