Turkey’s Central Bank Raises Inflation Forecast

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Turkey’s central bank on Friday raised its inflation forecast for this year and the next, as consumer price increases have slowed less than expected in recent months despite higher interest rates.

The central bank now sees inflation reaching 44 percent at the end of 2024, up from a previous estimate in August of 38 percent.

Consumer prices are expected to rise by 21 percent by the end of 2025, compared to 14 percent in the last forecast.

“The underlying trend in inflation is improving, but more slowly than expected,” central bank governor Fatih Karahan told reporters.

Turkey’s central bank began to raise interest rates last year to battle soaring prices, after President Recep Tayyip Erdogan dropped his opposition to orthodox monetary policy.

In October, the central bank kept its main interest rate stable at 50 percent for a seventh consecutive month.

Inflation peaked in May at 75.45 percent, fuelled by a weak Turkish lira.

The inflation rate slowed to 49.4 percent in October, less than expected, and missed forecasts again in September when it cooled to 48.6 percent.

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