Inflation expectations for end of 2025 improve, shows survey

ANKARA

Inflation expectations for the end of 2025 declined from a previous 28.3 percent to 28.04 percent, a Central Bank survey showed on March 7.

Türkiye's annual inflation rate eased for the ninth consecutive month in February, slowing to 39.05 percent, with consumer prices rising 2.27 percent month-on-month.

Consumer prices are forecast to rise by 2.27 percent in March, and 2.25 percent in April, according to the survey.

The 12-month ahead inflation expectations also improved, falling from 25.26 percent to 24.55 percent.

In February, the Central Bank lifted its annual consumer inflation forecast for 2025 from the previous 21 percent to 24 percent, while keeping its forecast for 2026 unchanged at 12 percent.

The 24-month ahead inflation expectations declined from 17.26 percent to 17.06 percent.

As inflation continued to decline, the Central Bank lowered its key interest rate by a further 2.5 percentage points on March 6.

The bank’s Monetary Policy Committee said it was reducing its benchmark one-week repo rate from 45 percent to 42.5 percent.

It was the bank’s third rate cut in a row.

“Considering the risks to the inflation outlook, we continue to think that the total [rate] cuts for the year could be more limited than markets expect,” Haluk Bürümcekçi, an economist, told state-run Anadolu Agency agency, commenting on this week’s interest rate reduction.

While the committee retained its positive evaluations regarding the inflation trend, it preferred a more cautious tone of the growth outlook, Bürüncekçi said.

Participants of the Central Bank’s survey lifted their GDP growth expectations for 2025 from a previous 3 percent to 3.1 percent, while increasing growth forecasts for 2026 from 3.9 percent to 4 percent.

The Turkish economy expanded by 3.2 percent last year to reach a size of $1.32 trillion, after growing 5.1 percent in 2023.

The current account balance is expected to post a deficit of $19.4 billion at the end of this year, an upward revision from the previous $18.8 billion, showed the survey. But participants’ current account deficit forecasts for 2026 improved from $24.6 billion to $24.49 billion.

The Central Bank’s Market Participants Survey monitors the expectations of experts and decision-makers from financial and real sectors related to various key economic variables.