Turkey's Central Bank Shockingly Doubles Inflation Forecast to 58%

Turkey's central bank, under the leadership of new governor Hafize Gaye Erkan, expects inflation to reach 58% by the end of 2023, more than double its previous estimate. Factors such as exchange rate developments, changes to economic policy, stronger-than-expected domestic demand, and a new forecasting approach contributed to the higher forecast. The central bank also revised its inflation forecast for the end of 2024 to 33% and for the end of 2025 to 15%. Erkan emphasized the need to restore expectations and predictability, and stated that the central bank will optimize the monetary tightening process to measure its effects on inflation, markets, and financial conditions.