Türkiye’s annual inflation is estimated to have continued its decline in September and dropped below the central bank’s benchmark policy rate for the first time since 2021, according to surveys.

The inflation likely eased to 48.3% last month, down from 51.97% in August, according to a median estimate of 19 economists in a Reuters poll and a separate survey by private broadcaster Bloomberg HT. Forecasts ranged from 47.8% to 49.1%.

Month-over-month, inflation is seen rising to 2.2%, with forecasts ranging between 2% and 2.8%.

Monthly inflation was high in January and February, largely due to a big minimum wage hike and new-year price updates, before slowing to some 3.2% in March and April.

After dipping in June, it rose to 3.23% in July on the back of mid-year price adjustments.

Monthly inflation was 2.47% in August on the back of a natural gas price hike for residential users, the first such price adjustment in almost two years.

Last month, Türkiye’s central bank held its main interest rate steady at 50% for a sixth straight month, saying it remained highly attentive to inflation risks but removing a reference to potential tightening.

In a recent research note, Bank of America said it expects an initial rate cut in December because services inflation has not yet slowed down, and monthly inflation is not where the central bank guides it to be.

It said that although the real sector "feels the pain," data shows a soft landing rather than a hard landing.

"We don't see a need for a rush to big cuts given the slow adjustment and still high level of inflation," it said, adding that sticky services inflation and still elevated food prices pose a risk to the central bank's year-end inflation target.

The central bank, which has hiked rates by 4,150 basis points since June last year, sees inflation falling to 38% at the end of this year and 14% next.

In its medium-term program, the government sees end-2024 inflation of 41.5%.

The Reuters poll showed annual inflation falling to 43% by year-end, higher than the central bank's forecast, based on the median estimate.

Forecasts ranged between 41% and 45%. The poll median also showed inflation is seen falling to 25% at end-2025.

The Turkish Statistical Institute (TurkStat) will release September inflation data on Oct 3.