Türkiye’s annual inflation rate is expected to decline to single digits in 2026, Vice President Cevdet Yılmaz has said.
The annual inflation will fall starting in the second half of next year,Yılmaz said, noting that the decline in monthly inflation has already begun.
“We’ll see even lower inflation rates, and hopefully, we’ll reach single-digit inflation in 2026,” he said.
“The Turkish economy grew 10 percent in real terms in the past two years, but we are having the inflation issue. We, of course, see this as a problem.”
They are trying to reduce inflation while aiming to maintain a certain economic growth momentum, Yılmaz added.
Meanwhile, Treasury and Finance Minister Mehmet Şimşek said that the government will continue to do whatever is necessary for a permanent decrease in inflation and current account deficit.
“We are further strengthening our relations with international financial institutions. There is strong support for the program we have put in place to ensure macro-financial stability,” Şimşek wrote on the social media platform X.
The annual inflation rate slowed from 61.5 percent in September to 61.36 percent in October.
The month-on-month increase in consumer prices eased from 4.75 percent to 3.4 percent. The monthly inflation was above 9 percent both in July and August.
In its latest medium-term program, the government forecast that the end-year inflation will decline from 65 percent in 2023 to 33 percent next year.
The government expects the annual inflation rate to further drop to 15.2 in 2024 and down to 8.5 percent in 2026.
Central Bank’s rate-setting meeting
Meanwhile, the Central Bank’s Monetary Policy Committee will meet this week to decide about its key policy rate, the one-week repo auction rate.
Most economists expect the Central Bank to deliver another 250 basis points hike in the policy rate to 37.5 percent.
Last month, the bank lifted the key rate by 500 basis points, which brought the cumulate rate hike since June to 2,650 basis points.
The survey of market participants the Central Bank unveiled last week showed that the policy rate is expected to be 37.8 percent at the end of 2023, up from the previous survey’s 33.68 percent.
The participants’ expectations for the 12-month ahead rate is 37 percent.