Disinflation program on track, says Mehmet Şimşek

ISTANBUL

The disinflation program is on track, continuing within a predictable framework, and will be implemented decisively, Finance Minister Mehmet Şimşek has said.

“We believe that year-end inflation will be within the [Central Bank’s] forecast range. We are doing whatever is necessary to ensure this happens,” Şimşek said in a speech he delivered at the general assembly of the Banks’ Association of Türkiye on May 23.

This week, the Central Bank kept its inflation forecast for 2025 at 24 percent, while leaving its end-2026 forecast unchanged at 12 percent.

“We are facing limited deterioration in expectations, exchange rate pass-through has weakened,” Şimşek said, adding that financial conditions are tighter, and oil prices have dropped significantly.

These two factors are also driving inflation downward, according to the minister.

The annual inflation rate in Türkiye was 37.86 percent in April, down from 38.1 percent in March. The April rate was the lowest since December 2021, when it was 36.08 percent.

Meanwhile, a monthly survey by the Central Bank showed on May 23 that 12-month-ahead annual inflation expectations decreased by 0.5 points in May compared to the previous month to 25.1 percent for market participants, by 0.7 points to 41.0 percent for the real sector.

Households’ 12-month-ahead inflation expectations, however, increased by 0.6 points to 59.9 percent.

The proportion of households expecting a fall in inflation in the next 12 months, compared to the previous month, increased by 0.6 points to 27.8 percent.