ISTANBUL (Reuters) – Turkish markets climbed yesterday, buoyed by inflation data showing consumer prices (CPI) dipping below a year-end target for the first time this year, raising hopes for an interest rate cut. Higher trading volume helped push the main stock index up 1.38 percent to 16,616.25 points in the early afternoon, while popular December 15, 2004 debt traded at a yield of 28.63 percent from Wednesday’s 28.92. Analysts say Turkey is set to beat an IMF-backed 20 percent CPI target for the end of the year and that year-on-year price data should slow well into 2004 due to a high base effect from early 2003. «Expectations that the year-end targets will be met means the stock market’s upward path is continuing,» said Ozay Ozkan at Sumer Investment in Istanbul. The central bank looks to future inflation trends when setting its interest rate policy. Traders yesterday said there was a high probability that the bank would cut rates shortly. But some analysts say officials may be more cautious and await political developments before lowering the overnight borrowing and lending rates. Turkey’s ruling party has yet to pass economic reforms delayed since mid-October under a latest IMF review of Ankara’s $16 billion pact. An announcement by the tourism minister that Turkey was expecting $9.8 billion in revenues from tourism this year, higher than a previous target of $8.7 billion, had also helped buying on the stock market, brokers said. Turkey announced headline November inflation figures after markets closed on Wednesday showing CPI up 1.6 percent at a yearly 19.3 percent – the lowest annual rate since 1977. Wholesale prices (WPI) climbed 1.7 percent for a yearly 16.2 percent. The government sees year-end WPI of 16.5 percent. Turkey’s central bank said its foreign currency reserves had fallen $1.027 billion to $31.324 billion in the week ending November 28.