HomeMost PopularChallenging Times: Turkish Inflation Forecasted to Hit 65.7% in February, Projected to...

Challenging Times: Turkish Inflation Forecasted to Hit 65.7% in February, Projected to Drop to 42.7% by End of 2024

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Overview of Inflation Forecast

On the challenging economic terrain of Turkey, the annual inflation rate is anticipated to soar to 65.7% in February, marking a monthly uptick of 3.7%. This surge is primarily fueled by escalating prices in the food and services sectors. However, hope is on the horizon as experts envision a downtrend, projecting the annual inflation to significantly drop to 42.7% by the conclusion of 2024.

Insights from Economists

Commentators in the financial realm have highlighted that alongside the surge in food prices, the inflation spike witnessed in February can be attributed to the enduring ramifications of the recent minimum wage escalation on the services industry. This rise follows January’s increase of 6.7%, which was partly influenced by an extensive minimum wage hike and a slew of price adjustments accompanying the new year.

Monetary Policy Response

The Turkish central bank has taken decisive action by ramping up rates by a formidable 3,650 basis points since June. Despite this aggressive tightening approach, the bank has opted to momentarily pause this cycle, asserting that the current 45% policy rate is potent enough to tame inflation. Underscoring their commitment, the central bank has retained a 36% year-end inflation target and has pledged to uphold stringent policies for a prolonged period to realign inflation with the projected trajectory.

Market Volatility and Future Projections

The economic turbulence in Turkey is vociferously reflected in the financial markets, with the Turkish currency witnessing a depreciation of over 36% in the bygone year and an additional 5.3% loss thus far in the current year. Despite these challenges, there is optimism on the economic horizon, as the median estimate in the Reuters poll indicates a decline in annual inflation to 42.7% by the end of this year, though surpassing the central bank’s intended target. Projections in the poll varied between 35% and 45%.

Upcoming Data Announcement and Conclusion

Anticipation looms as the Turkish Statistical Institute gears up to unveil the February inflation data on March 4th at 0700 GMT. This release is expected to shed further light on the economic landscape in Turkey, providing key insights for investors and analysts navigating these tumultuous times.

Polling by Ezgi Erkoyun; Editing by Daren Butler

(Contact: [email protected]; +90-212-350 7051; Reuters Messaging: [email protected])

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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