Central Bank keeps inflation forecasts unchanged

ANKARA

Türkiye’s Central Bank has kept its inflation projections for end-2023 and end-2024 unchanged at 22.3 percent and 8.8 percent, respectively.

Inflation is expected to sustain the downward trend by falling to 5 percent at the end of 2025, the bank said in its latest edition of quarterly inflation report, which Governor Şahap Kavcıoğlu unveiled in Ankara. The bank’s inflation forecast for 2025 in the previous report was also 5 percent.

“Regarding the main assumptions underlying the forecasts, the low course of commodity prices has been taken into account” it said.

It is projected that the fall in commodity prices, tourism revenues, and external demand conditions that are expected to be stronger in the second half of the year will favorably affect the current account deficit, the bank added.

Survey data and other high-frequency indicators suggest that production and consumption, which declined in February due to the disaster-related effects, displayed a strong recovery trend in March and April and that domestic demand was more influential than external demand in this development, according to the monetary authority.

Stability of the Turkish lira will be maintained by effectively using the Liraization Strategy through targeted credit, liquidity, and diversified reserve management and liraization targets, the bank said.

“In this context, the expectations, which quickly adapt to the reduction in the inflation rate, is also anticipated to support the decline in inflation.”

The annual inflation rate declined from 50.5 percent in March to 43.68 percent in April, the Turkish Statistical Institute (TÜİK) reported on May 3.