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The Turkish government’s macroeconomic stability program is advancing through its final phase, focused on structural transformation and sustainable disinflation after a period of policy normalization and rebalancing, Treasury and Finance Minister Mehmet Şimşek said on Friday.
Şimşek was speaking at the “Future of Finance Summit,” organized by Türkiye’s leading media group and Daily Sabah’s parent company, Turkuvaz Media.
The medium-term program, updated this September, aims at bringing inflation down to single digits, increasing predictability, achieving a sustainable current account balance and ensuring all these gains are permanent.
Şimşek said the three-stage road map – control, rebalancing and structural transformation – is progressing as planned. The first phase stabilized markets and curbed risks related to reserves and contingent liabilities, he said, while the second saw progress on inflation, an exit from the foreign exchange-protected Turkish lira deposit scheme, or KKM, and an improvement in the current account balance.
“The second phase is ending as of this month. We are entering the final phase. We are entering a period in which households and the real sector will feel the program’s results more strongly,” he said.
On inflation, Şimşek cited upward pressure from agriculture-related shocks, including frost and drought, which caused food prices to increase more than expected, and a decrease in fruit and grain production.
But he said Türkiye is likely to see annual inflation fall into the 20% range when initial data of 2026 are released, adding that the government’s economic program target will be met on the upper band with a slight delay.
“When the January inflation figures are announced as of Feb. 3, it is highly likely that Türkiye will see figures in the 20%s. Even with a slight delay, the inflation targets, at least the upper band, will have been met,” he noted.
“Disinflation will continue in 2026. The reason is very simple: because monetary policy, fiscal policy, and income policies will continue to be supportive.”
Earlier on Thursday, Türkiye’s central bank lowered its policy interest rate by 150 basis points to 38%, cutting at the higher end of expectations, as data over the last two months suggested that disinflation is back on track after summer price pressure.
The Central Bank of the Republic of Türkiye’s (CBRT) policy-making committee said inflation expectations and pricing behavior are “showing signs of improvement” even as they continue to pose risks to the disinflation process.
Consumer prices rose 31.1% year-over-year in November, with a 0.87% monthly increase, both readings below expectations and helped by easing food prices. Inflation had been above forecasts in August and September, but below them in October and November.
Last month’s reading market the lowest level since November 2021. It has eased from the peak of about 75% in May last year.
After a policy reversal earlier this year due to market volatility, Türkiye’s rate-cutting cycle resumed in July with a 300-basis-point move, followed by cuts of 250 points and then 100 in October amid rising food prices.
Analysts expect the central bank to continue easing next year.
The CBRT’s end-2025 inflation target stands at 24%, with its forecast range at 31%-33%.
The bank has pledged to reach its 16% interim inflation target by the end of 2026. The government’s medium-term program expects the same rate. The bank projects next year’s inflation between 13% and 19%, while market projections are in the 20s.
Şimşek said the 2026 target’s upper band remains “highly achievable” barring additional shocks.
One decision that would affect both the inflation and rates path is how much authorities decide to raise the minimum wage for next year, a debate in which workers are pressing for an increase that offsets past losses, especially for low-income households.
A commission of government, labor, and employer members will open debate on the matter in Ankara on Friday.
Earlier on Thursday, President Recep Tayyip Erdoğan urged the leading employers’ union, TISK, to give concessions to workers in the talks.
Şimşek said the government would adjust the administered and directed prices for the coming year according to the inflation target. “If the revaluation rate is 25%, we will increase the ones that are in favor of the citizens by 25%, but other public fees and charges will be set below 20%,” he said.
