Turkish Finance Ministry: Delayed effect of monetary policy to lead to disinflation

The delayed effect of monetary policy, which will lead to disinflation in the Turkish economy, will begin to work in the second half of 2024, the Turkish Minister of Treasury and Finance Mehmet Simsek said, Report informs via the Hürriyet newspaper.

He noted that some taxes were raised in July 2023 to “mitigate the consequences of the earthquake that occurred in Kahramanmaras. These increases will not occur in 2024. Efforts related to eliminating the consequences of the earthquake have led to an increase in prices for goods used in housing construction.

“We expect that this effect will not occur next year. The delayed result of monetary policy will begin to take effect. Fiscal policy will be improved and coordinated with monetary policy. Income policy will also be coordinated,” the minister noted.

Annual inflation in Türkiye stood at 61.98% in November, the country's Statistics Institute (TUIK) reported. Meanwhile, the Independent Economists Group (ENAG) claimed that annual inflation was 129.27% in November.

Turkish authorities expect inflation to almost halve to 34% by the end of 2024, Simsek said. The head of the Central Bank of Türkiye, Hafize Gaye Erkan, said that she predicts that inflation in the country will accelerate to 65% at the end of the year and slow down to 36% next year and 14% in 2025.

In November, the Turkish Central Bank raised the discount rate to 40% from 35%.