Turkey's Central Bank Promises to Achieve 24% Inflation Target
The Central Bank of Turkey will continue its strict policy to reduce inflation to 24% by the end of 2025.
The Central Bank of Turkey has promised to "do everything necessary" to achieve a target inflation rate of 24% by the end of the year. In an interview with Anadolu Agency, the head of the bank, Fatih Karahan, stated that the bank would continue its tight monetary policy. He also noted that the bank would not allow demand to disrupt the inflation reduction process, despite potential economic challenges.
Since December last year, the Central Bank of Turkey has reduced its key interest rate three times by 750 basis points, bringing it down to 42.5%. This decision was made amid a decline in annual inflation to 39%. However, analysts generally believe that by the end of the year, inflation will remain above the target level of 24%, which presents additional challenges for the Central Bank of Turkey.
Karahan emphasized that the main task is to continue working on reducing inflation while maintaining a strict monetary policy, which will help achieve price stability. He stated that when determining the key interest rate in the coming months, the priority will be ensuring the necessary tightness of policy to achieve the projected reduction in inflation.
Since mid-2023, the Central Bank of Turkey has actively tightened its policy, which marked a shift away from the unorthodox "easy money" policy that Turkey had followed in recent years. This policy led to a sharp depreciation of the lira and a rise in inflation, prompting the authorities to take measures to stabilize the economic situation.
In turn, Karahan added that decisive monetary policy will support interest in the Turkish lira and help restore confidence in the country’s economy.
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