People walk past the logo of Türkiye's Central Bank in Ankara, Türkiye on May 9, 2024. Türkiye's Central Bank has raised its end-of-year inflation forecast for 2024 to 38 percent, a two-percentage-point increase from previous estimates, as revealed in its latest quarterly report. (Mustafa Kaya/Handout via Xinhua)
ANKARA, May 9 (Xinhua) -- Türkiye's Central Bank has raised its end-of-year inflation forecast for 2024 to 38 percent, a two-percentage-point increase from previous estimates, as revealed in its latest quarterly report.
The bank's outlook for the subsequent years remains unchanged, with inflation expected to decrease to 14 percent in 2025 and 9 percent in 2026, aiming for a medium-term stabilization target of 5 percent.
Central Bank Governor Fatih Karahan acknowledged the higher-than-expected inflation rates, anticipating a 75 to 76 percent peak in May.
"Our commitment to a tight monetary policy will persist until we achieve our inflation targets," Karahan affirmed during the report's announcement.
Türkiye's annual consumer price inflation neared 70 percent last month, marking the highest level since 2022, driven by a 3.2 percent monthly increase due to rising service and food prices.
Economist Senol Babuscu from Ankara's Baskent University expressed uncertainty about the pace of disinflation despite expecting a fall in the second half of the year due to the base effect.
He added that the monthly inflation rate has to be monitored closely to see if forecasted figures will be achieved.
Türkiye has implemented a series of aggressive rate hikes and fiscal measures since mid-2023 to temper inflation. However, years of loose monetary policy have weakened the lira, contributing to one of the world's highest inflation rates and a significant cost-of-living burden for most households in the import-dependent country.
The lira has lost significant value since a 2018 currency crisis and remains down over 9 percent year-to-date against the U.S. dollar despite some stability in recent months.
While the economy cools down in line with the Ankara government's plan, cash-squeezed consumers and low-income earners will continue to struggle, said Mustafa Sonmez, an Istanbul-based independent economist and author.
"Pensions of most retirees have dropped below the poverty line as consumer prices continue to go up; their hardships should be addressed," he told Xinhua.
In a positive development, S&P upgraded Türkiye's long-term sovereign rating from B to B+ with a positive outlook on May 3.
Finance Minister Mehmet Simsek views this as a testament to the success of the disinflation program he leads, expressing confidence that other rating agencies will follow suit and upgrade Türkiye's rating. ■
A teller shows banknotes at an exchange office in Ankara, Türkiye on May 9, 2024. Türkiye's Central Bank has raised its end-of-year inflation forecast for 2024 to 38 percent, a two-percentage-point increase from previous estimates, as revealed in its latest quarterly report. (Mustafa Kaya/Handout via Xinhua)
People shop at a market in Ankara, Türkiye on May 9, 2024. Türkiye's Central Bank has raised its end-of-year inflation forecast for 2024 to 38 percent, a two-percentage-point increase from previous estimates, as revealed in its latest quarterly report. (Mustafa Kaya/Handout via Xinhua)