Central Bank set to meet this week for interest rate decision
ISTANBUL
Members of the Turkish Central Bank’s Monetary Policy Committee (MPC) are set to meet on Nov. 21 to decide about the key interest rate.
Most economists expect the bank to keep its policy rate, the one-week repo auction rate, unchanged for the eighth straight month at 50 percent.
The October inflation surprised on the upside, coming at 48.58 percent annually, and this week’s rate-setting meeting will take place against this backdrop.
The consensus is that the bank is likely to start the easing cycle next year. The MPC’s final meeting for this year will take place on Dec. 26 and 2025’s first rate-setting meeting will be held on Jan. 23.
Earlier this month, the Central Bank raised its year-end inflation forecast for 2024, 2025 and 2026.
Annual consumer inflation is projected to reach 44 percent this year, from the previous forecast of 38 percent, Governor Fatih Karahan said at a meeting on Nov. 8 to present the bank’s fourth and final inflation report of the year.
The year-end inflation forecast for 2025 was raised to 21 percent, up 7 percentage points from the previous report.
"We foresee that inflation will decline to 12 percent in 2026," Karahan said, adding that inflation is targeted to stabilize at 5 percent in the medium term.
Karakan reiterated that the medium-term forecasts are based on an outlook in which the tight monetary policy stance will be maintained until a significant and sustained improvement is achieved in the inflation outlook.
Speaking at parliament’s planning and budget commission last week, Finance Minister Mehmet Şimşek stressed that the economic program the government is implementing will continue to prioritize decreasing inflation.
Şimşek also said the government aimed to bring the budget deficit down to next year and support the Central Bank's disinflation path.
According to the minister, the deficit is expected to fall from this year’s anticipated 4.9 percent of GDP to 3.1 percent in 2025.
Şimşek vowed to take all necessary steps to fight inflation.
He stressed that three factors will determine the course of disinflation in the coming period.
“First, the lagged impact of monetary policy on inflation will become clearer over time. Second, the decline in the budget deficit to GDP ratio in 2025… Third, administered prices in line with the inflation target, to the extent budgetary constraints allow,” Şimşek said.
