Istanbul, February 7, 2025 – The Central Bank of Turkey has raised its inflation forecast for the year-end to 24 percent, up from the previous projection of 21 percent. This adjustment reflects the ongoing economic challenges that Turkey faces, as the country continues to experience significant inflationary pressures.
Turkey has been grappling with double-digit inflation since 2019, which has had a profound impact on the cost of living for millions of its citizens. Everyday expenses such as housing, healthcare, education, and services like hotels and restaurants have become increasingly expensive, putting a strain on households across the nation.
At a press briefing in Istanbul, Central Bank Governor Fatih Karahan provided an update on the country’s inflation outlook for the next few years. Along with the revised 2025 forecast, Karahan outlined expectations for inflation to ease gradually over the next few years, with a forecast of 12 percent for 2026 and 8 percent for 2027. These numbers suggest that inflation will continue to remain high in the near term but is projected to decelerate in the coming years as the central bank navigates the economic landscape.
The recent revision of Turkey’s inflation forecast does not indicate any immediate changes in the country’s monetary policy stance, Governor Karahan emphasized. Despite the upward adjustment to the 2025 inflation target, the central bank has made clear that its current focus remains on stabilizing inflation while supporting the broader economy.
In an effort to combat the persistent rise in prices, the central bank made a significant move last month by reducing its key interest rate to 45 percent. This decision marked the second interest rate cut in just two months, signaling a shift in the central bank’s strategy after a prolonged period of high-interest rates aimed at controlling inflation. The December rate cut had been the first in two years, which the bank attributed to progress in its battle against inflation.
Governor Karahan also noted that while inflation had slowed down in January, the rate remained high, with Turkey’s annual inflation dropping to 42.1 percent in the first month of 2025. This marked the eighth consecutive month of decelerating inflation, offering some hope that inflationary pressures may be starting to ease, albeit at a slow pace.
The Turkish government has faced significant challenges in addressing inflation, with the global economic environment and domestic policies both contributing to the rise in prices. While inflation has eased slightly, it remains a major concern for policymakers, who are balancing efforts to stimulate economic growth with the need to rein in prices that are squeezing households and businesses alike.
The impact of rising inflation on Turkey’s economy has been widespread, affecting everything from basic goods and services to housing markets and educational expenses. The government has introduced several measures in an attempt to shield the most vulnerable segments of the population, but the path to stabilizing prices is expected to be a long one.
As Turkey moves forward, the central bank’s revised inflation projections and ongoing policy shifts will be closely watched by financial markets and economists. The effectiveness of the country’s monetary and fiscal strategies will play a crucial role in determining the trajectory of inflation and the overall health of Turkey’s economy in the years to come.
In conclusion, while Turkey’s inflation forecast has been raised for 2025, the country’s central bank is continuing its efforts to manage economic volatility. The government’s measures to ease inflationary pressures will remain a focal point in the coming months as Turkey seeks to stabilize its economy and alleviate the financial burden on its citizens.