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ING expects Türkiye's annual inflation rate to fall below 30% by the end of 2025, maintaining its year-end policy rate projection at 35%, according to the bank's inflation assessment released Monday.
The Dutch bank's analysis follows July inflation data showing annual inflation at 33.5%, the lowest level in 44 months. BBVA Research also revised its year-end 2025 inflation forecast downward from 31% to 30% after the July figures came in below market expectations.
"However, these effects are expected to be short-lived and the underlying inflation trend is expected to continue declining in the coming period," ING stated in its assessment, noting that July inflation indicators reflected the effects of government price increases and automatic tax adjustments.
ING added: "Barring any unforeseen disruptions in exchange rates, wages, regulated prices or commodity markets for the remainder of the year, we expect the annual inflation rate to fall below 30% by the end of 2025. Given this outlook, our year-end policy rate projection stands at 35%."
Treasury and Finance Minister Mehmet Simsek said annual inflation in July was at its lowest level in 44 months, stating: "The disinflation process is progressing in line with our targets. We expect inflation to be within the CBRT's forecast range at year-end."
Simsek noted that monthly inflation was 2.06% in July due to temporary and seasonal effects, while annual inflation fell by 28.3 points over the past 12 months to 33.5%.
"Annual food inflation was 28%, core goods inflation was 20.7%. Service inflation fell below 50% for the first time in more than three years," Simsek said. "We will continue to implement our program with determination to ensure permanent price stability, which is our main priority."
Trade Minister Omer Bolat emphasized that as gains in the fight against inflation become permanent, Türkiye will enter a much stronger period in terms of both price stability and citizens' purchasing power.
"With forward-looking decisions being made based on falling inflation rates, I would like to state that we will rapidly reach low inflation levels in the disinflation process," Bolat said. "As the gains achieved in the fight against inflation become permanent, we will enter a much stronger period in terms of both price stability and our citizens' purchasing power."
Bolat noted that annual inflation, which has been declining for 14 months, fell to 33.52% in July, reaching its lowest level since November 2021.
Vice President Cevdet Yilmaz said the government aims to reduce inflation to the 20% range by year-end through strong coordination, structural transformation and maintaining economic predictability.
"Annual inflation, which fell to 33.52%, has dropped approximately 42 points in the 14 months since May last year. This outlook shows the effectiveness of our program and that our policies are re-establishing balance in the economy," Yilmaz stated.
BBVA Research revised its year-end 2025 inflation forecast to 30% from 31% following the July consumer inflation data. The institution expects the central bank of Türkiye to begin rate cuts in the second half of this year but to implement them gradually and cautiously.
The report lastly noted that not only monetary policy adjustments but also steps to strengthen fiscal discipline are critical for permanently reducing inflation.
It added that current inflation expectations remain at high levels and have not yet been strongly anchored, keeping upward risks to the inflation outlook alive.
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