Azernews.Az

By News Centre

The Governor of the Central Bank of the Republic of Turkiye (TCMB), Fatih Karahan, announced the second Inflation Report for 2025 at an information meeting at the Istanbul Finance Center. Inflation estimates for the end of the year and the next two years were shared as part of the meeting. In the first inflation report of the year, the TCMB announced the year-end inflation estimate as 24 percent, 12 percent for 2026, and 8 percent for 2027. The year-end inflation estimate remained unchanged.

As the Central Bank of Turkiye, we took the necessary steps proactively in the face of volatility in the financial markets in March and April.

In the coming period, we will maintain our determined stance on monetary policy and act to ensure the continuation of disinflation.

We continue to gradually reap the benefits of our tight monetary policy. Uncertainty about global trade and economic policies remains high. Tariff steps have slightly increased global inflation expectations. As a result of tight monetary policy, the demand composition has become more balanced. Industrial and service production increased in the first quarter. The labor market is less tight than the headline unemployment rate would imply. Although domestic demand lost momentum, it remained above expectations.

"The disinflationary effect of demand conditions diminished in the first quarter." We estimate that the ratio of the current account deficit to national income in 2025 will be slightly higher than in 2024 but will remain below long-term averages.

The disinflation process that started in June 2024 continues uninterrupted. Data for the last three months indicate a horizontal trend in the main trend. Current data imply that the exchange rate effect is more limited than in the past.
The decline in commodity prices is expected to support disinflation. The share of the 16 products most affected by the recent agricultural frost in the consumer basket is around 1.5 percent.

Inflation expectations continue to trend above our disinflation path. This outlook necessitates maintaining our tight and determined stance on monetary policy. The proactive steps we took within market functioning supported the tight monetary policy stance. Main trend indicators point to the continuation of the disinflation process. After goods inflation, the decline in service inflation also becomes evident. Core goods inflation strengthened in April. The tight monetary policy stance supports reserves. When creating medium-term forecasts, we based our decision on maintaining the tight stance of monetary policy until there is a significant and sustained improvement in the inflation outlook. The upward and downward influences on forecasts from the policy response have balanced each other out.

"We will not compromise on our cautious and tight monetary policy stance, considering that uncertainties are higher than in the past period."