Turkish Industrial Production (Aug YY) -1.9% (Prev. -0.3%)

A second consecutive negative annual print extends a deterioration that was already underway, consistent with the industrial slowdown that has historically accompanied periods of tight domestic monetary policy and compressed real credit growth in Turkey. Turkish activity data of this kind have tended to carry limited weight for the lira relative to inflation prints and central bank signalling: the currency has historically been priced off the rate path and the policy mix rather than off output, and soft activity is at times read as the intended transmission of restrictive policy rather than a fresh negative. The distinction worth drawing is between weakness that validates disinflation credibility, which rate-setters have in past episodes treated as necessary, and weakness deep enough to prompt premature easing, which is where credibility risk enters. The follow-ons are the monthly momentum within the detail, capacity utilisation and PMI readings for corroboration, and whether the central bank's rhetoric around demand conditions shifts at the next meeting. Single-month Turkish production data are volatile and frequently revised, so the trend across consecutive prints matters more than any one number.