Türkiye’s Inflation Projected to Drop to 24 Percent by Year-End

(MENAFN) The Turkish Central Bank announced on Thursday that it anticipates annual inflation will drop to 24% by the end of 2025, with a further decline to 16% by late 2026, underscoring its commitment to maintaining tight monetary policy until price stability is restored.

Central Bank Governor Fatih Karahan, speaking at a press briefing in Istanbul, stated, "We estimate that inflation will be between 25% and 29% by the end of 2025. Our forecasts for the end of 2026 indicate that inflation will decline to between 13% and 19%."

He added that interim inflation goals have been defined for the next two years. "We set our interim inflation targets for 2026 and 2027 as 16% and 9%, respectively," Karahan noted.

The Central Bank is aiming for inflation to ease to 9% in 2027 and stabilize at 5% in the medium term. A key factor behind the updated forecast for 2026—now 4 percentage points higher than earlier projections—is the rise in food prices, persistent underlying inflation, and elevated costs of imports priced in lira.

According to Karahan, shifts in global trade policy have eased some uncertainty, marginally lifting global growth projections. In response, the bank has adjusted its foreign demand expectations upward.

Ongoing geopolitical tensions have led to increased commodity prices, prompting the Central Bank to revise up its assumptions for oil and other imports. While food price projections for 2025 remain unchanged, those for 2026 have been increased.

Karahan stressed that managing domestic demand remains central to the fight against inflation. The Central Bank's current strategy, he said, aims to ensure demand stays at levels conducive to disinflation.

"As our cautious stance continues, we anticipate a steady decline in inflation in the coming period. Indeed, our resolute monetary policy stance will continue to support the disinflation process through a rebalancing of domestic demand, a real appreciation of the Turkish lira, and an improvement in inflation expectations," he said.

He further noted that falling inflation expectations and ongoing moderation in services inflation are signs that the downward trend in core inflation will likely continue through the rest of 2025. Fiscal discipline will also play a role in reinforcing these gains.

In summary, Karahan reiterated the Central Bank's intention to maintain a restrictive monetary stance until its inflation goals are met. Interest rate decisions, he said, will continue to be made cautiously and based on evolving inflation data.

"I would like to underscore on this occasion that we are taking a cautious, meeting-based approach to the policy rate and its magnitude, focusing on the inflation outlook. If we anticipate a significant and persistent deterioration in inflation, we will effectively use all monetary policy tools," he added.

MENAFN14082025000045017169ID1109927891