Türkiye’s Central Bank chief has vowed to take all necessary steps to meet a year-end inflation target of 24 percent, assuring that the bank will not allow demand conditions to impair the disinflation path.
Speaking to the Anadolu news agency on Thursday, Fatih Karahan emphasised that the decline in inflation is primarily driven by a decrease in the underlying trend, supported by tight monetary policy, rather than base effects.
He highlighted that this improvement in the underlying trend will remain a key factor throughout the rest of the year and reaffirmed the central bank’s commitment to its inflation target.
Karahan stressed the importance of maintaining a tight monetary policy stance and underscored the necessity of keeping demand at disinflationary levels to ensure further progress in reducing inflation.
“We will ensure that demand conditions do not impair the disinflation process,” he said, noting that the conversion to Turkish lira deposits has outpaced conversions to foreign currency deposits.
Looking ahead, Karahan stated that the central bank’s priority will be setting the policy rate at a level that ensures the tightness required by the projected disinflation path. He reiterated the bank’s unwavering stance on monetary policy.
Current account deficit outlook for 2025
According to Karahan, developments in Türkiye’s current account balance have indicated that the current account deficit-to-GDP ratio decreased to 0.8 percent at the end of 2024, down from the pre-tightening level of 5 percent.
“The average ratio of current account deficit-to-GDP in the last two decades has been 3.7 percent, so 0.8 percent is significantly low compared to historical averages,” he said, despite a slight increase in the current account deficit in 2025.
He added that due to uncertainties surrounding global trade, export-led downside risks stand out among factors that may impact the current account balance in 2025.
“We expect the current account deficit-to-GDP ratio in 2025 to be higher than in 2024, yet remain significantly below long-term averages,” Karahan told Anadolu.
