Markets believe program will bring inflation down: Şimşek

LONDON

The market is beginning to believe that the government’s economic program will bring inflation down, Finance Minister Mehmet Şimşek has said.

“Inflation may be around low 40s or high 30s later this year, and next year it might be around mid-10s and then will decline to single digits," Şimsek said at event in London organized by the Chatham House, a think tank.

The annual inflation rate accelerated from 69.8 percent in April to 75.45 percent in May with consumer prices rising 3.37 percent month-on-month, according to the latest official data.

Last month, the Central Bank lifted its inflation forecast from the previous 36 percent to 38 percent for the end of 2024.

The bank, on the other hand, kept its inflation forecasts for 2025 and 2026 unchanged at 14 percent and 9 percent, respectively.

Inflation expectations for the end of 2024 declined from 43.64 percent in May to 43.52 percent in June, the Central Bank’s Survey of Market Participants showed earlier this month.

The 12-month inflation expectations also eased from 33.21 percent to 31.79 percent.

“We are using all tools to bring inflation under control,” said Şimşek, who traveled to London earlier this week to meet with international investors.

The minister also stressed the decline in the current account deficit.

“The current account deficit will be probably somewhere between 2 to 2.5 percent of GDP this year. It was 6 percent of national income last year,” he said, adding that the Central Bank’s reserves have risen by $70 billion compared to the end of March.