As Turkey's inflation dips to 35%, will central bank pivot on interest rates?
Inflation has slowed to the lowest level since 2021, sparking speculation that the central bank could resume easing monetary policy amid mounting pressure on Turkey's finance chief — but analysts caution against a rush.
ANKARA — Turkey’s annual inflation rate slowed to 35.41% in May, the lowest since November 2021, official data showed on Tuesday — potentially opening the door to interest rate cuts. But analysts caution against a rush to loosen monetary policy.
The year-on-year inflation slowed from 75.45% in the same month last year, according to data released on Tuesday by the Turkish Statistical Institute. Meanwhile, month-on-month inflation eased to 1.53% from 3% in April.
Yearly inflation came in lower than forecasts by Bloomberg and Reuters, which put median inflation estimates at roughly 36% prior to the announcement. The price increases were driven primarily by rising costs of food, alcoholic beverages, tobacco and clothing.
“Annual inflation, which has fallen by 40 points over the past 12 months, declined to 35.4% — its lowest level since November 2021,” Turkey’s Finance Minister Mehmet Simsek posted on the social platform X following the release of figures.
