Wage hike tests government39;s inflation strategy
Cenbank rate cut expectations strengthen
Cut expectations range from 150 to 250 basis points

ANKARA, Dec 25 Reuters Expectations of a Turkish central bank rate cut strengthened on Wednesday after a lessthanrequested minimum wage hike, economists said, as it showed the government39;s determination to reach disinflation targets.

The 30 rise will test the government39;s efforts to fight years of chronic high inflation as it could pressure prices.

Turkey39;s net monthly minimum wage will be 22,104 Turkish lira 627 in 2025. The government said the level was set to maintain fiscal discipline and continue the fight against inflation. The workers union had requested an increase around 70.

Economists said the wage rise, impacting some 9 million workers, made it certain the central bank will start policy easing later this week.

Expectations for a rate cut have risen, and I39;ve revised my own forecast from a 150 basis point cut to 200 basis points. However, a 250 basis point cut wouldn39;t be a surprise, said Filiz Eryılmaz, chief economist at ALB Yatırım.

According to a Reuters poll published last week, the central bank is expected to start an easing cycle after eight months of steady policy. Economists expected the first rate cut to be between 150250 basis points from the current policy rate of 50.

This minimum wage increase, which is at the lower end of expectations, is expected to have an additional CPI impact of…