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Türkiye will not abandon its disinflation drive during the election period, Treasury and Finance Minister Mehmet Simsek said Wednesday, stressing that reaching price stability tops the government’s agenda.
"Fighting the cost of living is our biggest priority. We will not give up on disinflation during the election period," Simsek told reporters in a live interview, adding that the newly unveiled Medium-Term Program's (MTP) objective remains disinflation, although he acknowledged that the process is not moving at the desired pace.
"Disinflation is happening. Is it happening at the pace we want? No. There are many domestic and external factors at play. Especially these days, external factors are coming to the fore," he remarked.
Türkiye's inflation dropped to 31.5% for a third consecutive month in August, with monthly inflation coming in at around 1.8%. However, renewed energy cost pressure amid heightened tensions around critical waterways in the Middle East, including the Strait of Hormuz and the Bab el-Mandeb Strait, is expected to put fresh pressure on September inflation.
Under the new MTP, unveiled earlier this month, the government sharply raised its inflation targets from 16% to 28.4% for 2026, from 9% to 21% for 2027 and from 8% to 13.5% for 2028, before targeting single-digit inflation in 2029.
The government also lowered its 2026 growth forecast to 3.3% from 3.8% previously, while expecting growth to remain at 4.3% in 2027 and 5% in 2028 and 2029. Simsek said the deviation in growth was relatively limited compared with the scale of the external shocks facing the economy.
"The deviation here is not particularly significant relative to the shock we have experienced," he said. "The war has had some impact, but it is clear that inflation in Türkiye has shown more persistence and rigidity than we anticipated or than the model predicted."
Simsek reiterated that price stability remains the program’s core objective and that fiscal policy will continue to support it. He also pledged that public employees and retirees will receive pay increases at least in line with inflation, describing the protection of wage earners’ purchasing power as a key priority.
"The most important factor affecting election results will be the continuation of disinflation," Simsek said, stressing the importance of inflation slowing at a pace that households can more clearly feel.
Simsek also emphasized that Türkiye could move toward a more flexible exchange-rate regime once inflation moves toward single digits and exporters’ mandatory foreign-currency sales requirement is removed. He added, however, that the conditions for such a shift have not yet emerged.
For now, the central bank manages day-to-day exchange-rate operations, even though Türkiye’s normal framework is a floating exchange-rate regime, he noted.
The minister also stressed that the exchange rate is not the only factor shaping Türkiye’s competitiveness, with input costs and external demand also playing important roles.
Türkiye offers some of the cheapest natural gas and electricity to industry compared with its competitors outside the Middle East, he argued.
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