Turkish Central Bank keeps inflation forecasts unchanged

ISTANBUL

Pledging a continued tight stance in monetary policy, the Turkish Central Bank head said the bank had kept its inflation expectations unchanged from its last report.

The bank's year-end inflation forecast for this year is 36% and is 14% for 2025, Governor Fatih Karahan told a Thursday press conference in the capital Ankara.

"At the end of May, we will enter a disinflation process where we will see a rapid decline in annual inflation," he said.

The bank predicts that average monthly inflation will fall below 2.5% for the year and around 1.5% in the last quarter of the year, he stressed.

The level of monetary tightness required for the disinflation process has been reached, Karahan said, underlining that the current policy rate level will be maintained as long as necessary.

The bank’s policy rate is currently at 45%.

Since the last report, last November, real and financial indicators confirmed that the bank's policies are right, the governor underlined.

With positive developments, strong capital inflows were seen in the country, he said.

The bank will keep monetary tightening policies till it reaches the inflation target, Karahan noted.

"We will not allow any deterioration in the inflation outlook," he said, adding: "Our policies have begun to show their effects, inflation will decrease permanently, and price stability will be permanently achieved."

2023's year-end inflation was in line with the bank's forecasts, he stressed.

The annual inflation rate in December was 64.77%.