Türkiye’s disinflation process will get back on track after a delay of a few months, Treasury and Finance Minister Mehmet Şimşek said on Friday.
Şimşek also pledged to meet budget targets even as the government waives income with steps to cushion the impact of rising crude oil prices.
Türkiye’s disinflation has been tested by the energy prices that have been soaring due to the U.S.-Israel war on Iran, which effectively shut the key Strait of Hormuz to shipping.
In May, consumer prices in Türkiye increased 1.71% monthly and 32.61% annually, highlighting fallout from the conflict and focusing attention on the monetary policy outlook.
Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan on Friday said price stability remains the top priority and that the disinflation process will continue despite recent geopolitical tensions.
Both Şimşek and Karahan were speaking at the General Assembly of the Banks Association of Türkiye (TBB) in Istanbul.
Their remarks came a day after the central bank left its key interest rate at 37%, as expected, holding steady for a third consecutive meeting, as it monitors the inflation impact of the Iran war.
Since the conflict started at the end of February, the CBRT has halted an easing cycle that began in late 2024 and taken other liquidity steps that pushed the overnight rate up to the 40% limit.
Karahan said policy tools and strong reserves provide the means to sustain disinflation, and that a rebalancing in domestic demand is expected to continue supporting the process.
The governor said the central bank will continue to monitor all factors affecting the inflation outlook.
Şimşek pledged continued fiscal policy support and structural reforms to bring inflation down to low single digits.
In its quarterly inflation report in May, the central bank raised its end-2026 interim inflation target to 24% from 16%, forecasting that the short-term inflationary effects of the Iran war would remain “pronounced.”
Şimşek forecasted a “manageable” current account deficit at 3% of gross domestic product (GDP) or lower by the end of the year.
He said the government’s budget deficit target will be reached despite the sliding fuel pricing mechanism, a step to limit the pass-through of crude oil prices to fuel pumps.
Karahan cited the latest policy measures, as he said loan growth is moving toward a more balanced path.
Strong reserves alongside policy tools act as buffers against geopolitical risks to disinflation, he noted.
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