Türkiye’s finance minister predicts August inflation drop
Türkiye's Treasury and Finance Minister Mehmet Şimşek. (Photo via TRT)
Türkiye’s Treasury and Finance Minister Mehmet Simsek shared his optimistic outlook on inflation trends, expecting a noticeable drop in August. His comments come amid ongoing economic challenges and the latest data from the Central Bank of Türkiye.
In a statement posted on social media, Simsek highlighted the positive trajectory of inflation expectations over the past ten months.
“Despite the temporary effects that led to higher inflation in July, which slightly increased year-end expectations, the 12-month inflation forecast has decreased to 28.7%, and the 24-month forecast is now at 19.3%,” he said.
Simsek added that he anticipates a significant decline in annual inflation starting in August, with the downward trend continuing throughout the remainder of the year.
Central bank survey reflects mixed economic expectations
The Central Bank of Türkiye (CBRT) released its August survey of market participants, revealing adjustments in inflation and currency expectations. The year-end Consumer Price Index (CPI) forecast increased slightly from 42.95% to 43.31%, marking the first rise in five months. Meanwhile, the 2025 year-end inflation projection edged up from 25.4% to 25.55%.
Despite the slight increase in year-end expectations, the 12-month inflation outlook improved, dropping from 30.02% to 28.71%. Similarly, the 24-month forecast saw a slight decrease from 19.32% to 19.30%.
Currency and interest rate projections updated
Participants in the survey adjusted their year-end exchange rate expectations for the Turkish lira, with the dollar-to-TL forecast decreasing from 37.36 to 37.27. However, the 12-month exchange rate expectation rose from ₺41.51 to ₺42.03.
Interest rate predictions also shifted, with the policy rate expected to decrease from 50% to 48.10% over the next three months. The 12-month rate projection was revised down from 34.57% to 33.30%.
Growth and current account forecasts
The survey maintained the year-end growth forecast at 3.4%, while the 2025 growth expectation was slightly lowered from 3.6% to 3.5%.
In terms of the current account deficit, the year-end forecast was revised down from $27.6 billion to $25.5 billion. The 2025 forecast was also adjusted downward from $27.1 billion to $25.6 billion.
The survey conducted monthly, included 72 participants, with 54 from the financial sector and 18 from the real sector.
