Page 16 - Turkey Outlook 2025

1-2%s for the official monthly headline indicator.
The central bank also tracks inflation expectations via its monthly "Sectoral Inflation Expectations" and "Survey of Market Participants" releases.
Another miss
On November 8, the central bank hiked its end-2024 official inflation "target" to 44% y/y in its latest quarterly inflation report from the previously "targeted" 38% y/y.
The upper boundary of the forecast range was also moved up to 46% y/y from 42% y/y.
The central bank also targets end-2025 official inflation of 21% y/y, with the upper boundary standing at 26% y/y.
During a press conference, central bank governor Fatih Karahan said that the regulator sees official annual inflation at 42% (the upper boundary of the previous end-2024 target) in January and at 38% (the previous target) in March.
The central bank also expected that unadjusted monthly inflation for November and December would be released at levels a little bit higher than the 1.5% level, while the seasonally adjusted figures would come out at levels around the 2.3%s or a little bit above 2%.
As TUIK released 2.24% monthly inflation for November, the central bank has to acknowledge another miss.
A 1.6% month-on-month inflation release for November would have meant a 46% annual inflation figure. However, a November figure of 47.1% still provided the space for a rate cut of up to 2.5%.
The seasonally adjusted monthly inflation figures will edge up a little in 1Q25 (due to wage hikes and new year price/fee updates), according to the governor.
It is foreseen that they will, meanwhile, fall below the 1.5% level starting from 3Q25 and end the year in and around 1.3% (closer to the 1% level).
250bp rate cut on December 26
At its latest monetary policy committee (MPC) meeting held on December 26, the authority cut its policy rate by 250bp to 47.5%.
Prior to this, the MPC had kept its policy rate unchanged at 50% for eight straight months since March.
On November 29, TUIK said that Turkey had entered a technical
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