FILE PHOTO: Women buy food from a street vendor at a pier in Istanbul, Turkey, April 2, 2025. REUTERS/Louisa Gouliamaki/File Photo

ISTANBUL (Reuters) -Turkey's monthly inflation rate is expected to be 1.79% in August, while the annual rate is seen dipping to 32.6%, a Reuters poll showed on Friday.

The median estimate of ten economists showed monthly inflation slowing to 1.79% from 2.06% in July. Forecasts ranged from 1.54% to 2.2%. Year-on-year inflation forecasts ranged between 32.2% and 33.2%, down from 33.52% in July.

In March, Turkish assets came under pressure, with the lira hitting a record low against the U.S. dollar after Istanbul Mayor Ekrem Imamoglu — President Tayyip Erdogan's main political rival — was jailed pending trial on graft charges that he denies.

Market volatility eased after the central bank raised rates, tightened liquidity and sold some $57 billion in foreign currency. The central bank also took steps to tighten policy by 700 basis points.

In July, the central bank cut the policy rate by 300 basis points, relaunching the easing cycle, and said that leading indicators suggest a continued gradual slowdown in the main trend of inflation in August.

As part of a new strategy, the central bank set new targets and forecasts for inflation in an effort to better communicate where the monetary policy is heading.

In a recent note, HSBC said inflation momentum measures improved with core goods inflation moderating below 2% in July.

"We continue to expect the central bank to deliver three 250-point rate cuts in the rest of this year, taking the policy rate from 43.0% currently to 35.5% by December....If the August CPI print also points to further disinflation gains, this might lead to a larger rate cut on September meeting," HSBC said.

Inflation is seen droppingg to 30% by year end, according to the poll median, higher than the central bank target of 24% and its forecast range of 25-29%. In the poll conducted a month ago, the median of the year-end forecasts stood at 29.75%.

The Turkish Statistical Institute will release August inflation data at 0700 GMT on Sept 3.

(Reporting by Ezgi Erkoyun; Editing by Jonathan Spicer)