Şimşek sees interest rate falling in line with inflation
ISTANBUL
Finance Minister Mehmet Şimşek has reportedly told some lawmakers that they will lower interest rates in line with inflation.
Şimşek has been meeting with MPs from the ruling Justice and Development Party (AKP) this week, briefing them on the developments in the economy and responding to their questions, sources told daily Hürriyet.
During those meetings, Şimşek reiterated that the economy program is being implemented without facing any problems and is on track.
The minister told lawmakers that inflation is expected to drop to around 20 percent in 2026 and to 15 percent or below in 2027.
During this period, the interest rate will be a little above the inflation rate, Şimşek said, according to people familiar with the matter.
Şimşek identified the housing, food/services and energy sectors as the main drivers behind the elevated inflation and reportedly said that the government is working to bring prices in those sectors under control.
The minister voiced confidence that rent and home prices will decline as inflation slows, the sources said.
This week, in a widely expected move, the Central Bank decided to keep the benchmark policy rate, the one-week repo rate, unchanged at 46 percent.
From May 2023 until last March, the bank raised the rate from 8.5 percent to 50 percent and then kept it constant until its meeting last December, when it lowered the rate by 250 basis points to 47.5 percent.
The bank cut the benchmark rate at its last three meetings from 47.5 percent to 42.5 percent. In the April meeting, in a surprise move, the bank raised the rate by 350 basis points to 46 percent.
