Turkish economic crisis

President Recep Tayyip Erdoğan has emphasized his administration's commitment to achieving a lasting reduction in inflation.

"The main priority of our economic program is to increase the welfare of our nation by reducing inflation to single digits," Erdoğan said during an event in Istanbul on May 25.

Tight monetary policy will continue, Central Bank Governor Fatih Karahan has said, a day after the bank kept its policy rate, the one-week repo auction rate, unchanged at 50 percent.

Speaking at the Arab Banking Summit, Karahan reiterated that the headline inflation is expected to decline sharply in June.

In a widely expected move, the Central Bank has held its policy rate — the one-week repo auction rate — steady at 50 percent.

There has been an unprecedented improvement in the Central Bank of Türkiye's dollar reserves, Finance Minister Şimşek said on Monday.

"The Central Bank's daily balance sheet shows an improvement of almost $49 billion between April 1 and 16. This is an improvement unprecedented in history," Şimşek said in an interview with TRT Haber.

The Central Bank's Monetary Policy Committee (MPC) will meet for a fifth time this year to decide on the one-week repo auction rate.

Economists widely expect the bank to keep the key interest rate unchanged at 50 percent on May 23 as it did at the MPC meeting in April.

The positive results of the economic program the government is implementing are reflected in inflation expectations, Finance Minister Mehmet Şimşek said.

The inflation expectations for the end of 2024 declined from 44 percent in April to 43.64 percent in May, the Central Bank's Survey of Market Participants showed on May 17.

The decline in the annual current account deficit, which has been continuing for eight months, is the success of the economic program, Finance Minister Mehmet Şimşek has said.

The annualized current account deficit declined by $25.8 billion in March compared with June 2023, Şimşek said, commenting on the latest balance of payments data the Central Bank unveiled on May 13.

Credit rating upgrades by major rating companies show that "we are on the right track," Treasury and Finance Minister Mehmet Şimşek has said, referring to the economic program the government is implementing.

Credit ratings agency S&P on Friday upgraded Turkey's ratings to "B+" from "B", saying that the coordination between monetary, fiscal, and income policy is set to improve, amid external rebalancing.

The credit action comes a week after the Turkish central bank kept its policy rate unchanged at 50%.

Türkiye's annual inflation will begin to decline sharply "in line with our predictions" after it reaches peak in May, Finance Minister Mehmet Şimşek has said.

His remarks came after the data from the Turkish Statistical Institute (TÜİK) showed on May 3 that the annual inflation rate accelerated from 68.5 percent in March to 69.8 percent in April.