Turkey is on the brink of overcoming its inflation crisis, with experts predicting a peak close to 75% before a deceleration in price growth. The country’s inflation woes have been attributed to loose monetary policies, excessive government spending, and currency instability.

Following President Recep Tayyip Erdogan’s re-election, the central bank has shifted towards more conventional economic strategies. The hope is that inflation will align with forecasts, paving the way for a potential decrease in interest rates after a period of aggressive monetary tightening.

Forecasts suggest that Turkey’s inflation could end the year at 38%, making it the world’s sixth-fastest in terms of inflation rate. Economists anticipate a gradual decline in annual inflation rates by 10 percentage points in July and August.

However, some experts are cautious about the ambitious target, with concerns that the projected 38% may be challenging to achieve. Any significant deviation from the expected inflation trajectory could lead to further rate hikes, as the central bank has already implemented substantial tightening measures.

While official borrowing costs have remained steady in recent meetings, policymakers have introduced measures to control loan growth and reduce market liquidity to maintain restrictive financial conditions. The central bank is expected to maintain its 50% policy rate until the third quarter, with the possibility of rate cuts in the fourth quarter.

Monthly price growth, a key indicator for the central bank, is expected to have remained stable in May, hovering around 3%. The bank foresees a relatively stable inflation trend, but highlights the potential impact of energy prices on the overall inflation outlook.