The Central Bank of Türkiye recently raised its year-end inflation forecast to 38 percent, up from a previous estimate of 36 percent, reflecting the persistent inflationary pressures facing the Turkish economy. Despite a series of interest rate hikes, consumer price growth surged to 69.8 percent in April, prompting the central bank to adjust its projections and reaffirm its commitment to maintaining a tight monetary policy.
The central bank has responded to the increase in inflation by implementing a series of interest rate hikes, totaling 3,650 basis points since June 2023, gradually increasing rates from 8.5 percent to 50 percent.
The Central Bank of Türkiye has also implemented the most recent hike of 500 basis points in March due to the deteriorating inflation outlook. While the bank held rates steady in April, it signaled readiness to tighten further in case of significant inflationary developments.
The central bank projects inflation to peak around 73-75 percent in May before starting its downward trajectory in the second half of the year. Hence, Türkiye aims to reach an inflation rate of 38 percent by the end of 2024.
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Earlier this month, Mehmet Simsek, Minister of Finance, said on social media platform X: “After annual inflation reaches its peak in May, it will begin to decline sharply in line with our predictions. Thus, the transition period in the fight against inflation will end and we will enter the disinflation process.”
Central Bank governor Fatih Karahan reiterated this outlook, stating that inflation is expected to start slowing next month.
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