The Governor of the Central Bank of Turkey, Fatih Karahan, predicts inflation of 38% at the end of this year."In May inflation has peaked due to the low base effect and we are now at the end of this transition period. We will enter a period of disinflation and it will begin to gradually decrease by the end of the year. At the end of the year, inflation will drop to 38%, Karahan told the Sabah newspaper. He added that the Central Bank “will maintain a tight monetary policy until there is a significant improvement in the inflation forecast.“
Karakhan announced that as part of the measures to stabilize the negative phenomena in the economy, it was possible to “withdraw more than 1.5 trillion pounds (about 46 billion USD) of liquid funds from the market”. The bank will continue to monitor the liquidity situation and, if necessary, will use tools to sterilize the money supply. Over the past 9 months, as reported by the head of the Central Bank, the share of deposits in Turkish lira has increased from 32% to 48%, and the share of deposits protected from exchange rate changes has decreased from 26% to 13.4% .
Karahan also said the bank expects to limit rent growth in the housing sector, which should be influenced by the expected slowdown in house price growth. The central bank, according to its head, will continue to closely monitor the situation with the issuance of commercial loans. Over the next period, “the overall growth rates of commercial loans are expected to stabilize”, Karahan added.
Inflation in Turkey in May amounted to 75.45% (on an annual basis). According to data from the National Statistical Institute, this is the maximum since November 2022 (84.4%). According to the group of independent economists ENAG, annual inflation in Turkey in May was 120.66%. In April, inflation in the country was 69.8% (on an annual basis). In ENAG, it was rated at 124.35%.