The Turkish Central Bank continues to implement a tight monetary policy, despite a series of interest rate cuts, as inflation remains high and economic growth exceeds expectations. Fatih Karahasan, the governor of the Central Bank, stated in an interview with Anadolu Agency that inflation still presents a challenge, emphasizing that the bank will take all necessary measures to reduce it to 24% by the end of the year.

Karahasan explained that economic growth in the last quarter of 2024 was much stronger than the bank's expectations, with data showing strong retail sales in January, despite a relatively moderate spending on credit cards since the beginning of the year. He added that annual inflation slowed in the past nine months, but it remains at 39%, which is eight times higher than the official target of 5%.

The Turkish Central Bank faces the challenge of resetting inflation expectations among households and businesses, which are significantly higher than official estimates, making it difficult to contain inflationary pressures. Although it began cutting interest rates in December, with the base rate dropping from 50% to 42.5%, further monetary tightening is still needed to ensure price stability.

While many investors expect the Central Bank to continue lowering interest rates during the remaining meetings of the year, Karahasan confirmed that the monetary policy will remain tight until demand helps reduce inflation, adding that the bank will not hesitate to take additional measures if necessary.