Central Bank aims to lower interest rate to 21 pct by next year-end

ISTANBUL

The Central Bank of Türkiye targets to lower its policy interest rate to 21 percent by the end of 2025, the bank’s governor has said.

Speaking at the Istanbul Chamber of Industry (ISO), Fatih Karahan said on Nov. 27 projections related to the underlying trend of inflation improved, albeit slower than anticipated.

“With the continuation of the disinflation process and the subsequent establishment of price stability, predictability will increase,” he said.

"Thus, investment, production and consumption decisions will be made with a longer-term perspective.”

Karahan noted that the disinflation process is ongoing and recalled that consumer inflation fell to 48.6 percent in October, a significant drop from its peak in May.

The bank expects 44 percent growth by the end of the year, he noted.

“In addition to the low core goods inflation, services sector inflation, where signs of improvement have become more evident, also plays a role in this development,” Karahan added.

"Inflation, which fell rapidly in the summer months due to the base effect, will continue to fall in the coming period with the improvement in monthly inflation."

Underlining that the bank will maintain its tight monetary policy stance in a way that ensures the continuation of disinflation, Karahan emphasized that the slowdown in the underlying trend of inflation continues and that the bank closely monitors the underlying trend of inflation.