Turkey’s central bank has revised its inflation forecast for the year, projecting it to reach 38% by the end of 2024. This increase is attributed to a 4 percentage-point rise in the first four months of the year.
The bank’s mid-point CPI forecast for the same period is also set at 38%. However, the forecast for the end of 2025 remains at 14%. The bank anticipates a decrease in inflation to 9% by the end of 2026.
To combat rising inflation, the central bank has been proactive in raising interest rates. Since last June, rates have been increased by a significant 4,150 basis points. However, in April, the policy rate was kept unchanged at 50% to allow the previous monetary tightening measures, including a 500-point hike in March, to have an impact on inflation.
The central bank’s Governor, Karahan, has expressed a commitment to further tightening the policy if inflation worsens. This persistent cost-of-living crisis has been a concern for the Turkish population. According to a Reuters poll, inflation is expected to decrease to 43.5% by the end of 2024.
Central Bank Deputy Governor Cevdet Akcay has stated that, under the current policy program, it is not possible for inflation to exceed 42% by the end of the year. However, the annual inflation rate is currently hovering around 70%, the highest since late-2022.
