Turkey’s central bank raised its year-end inflation forecast to 24 per cent on Friday from 21 per cent previously and Governor Fatih Karahan said the bank is “not on autopilot mode” after two straight rate cuts, given decisions are made based on data.

The forecast revision came as both inflation and interest rates head lower and authorities predict the coming end of years of price turmoil.

Presenting the bank’s quarterly inflation report in Istanbul, Karahan said the bank left its end-2026 forecast unchanged at 12 per cent, while its forecast for end-2027 inflation was 8 per cent.

The bank’s inflation battle began in June 2023 when it launched a series of aggressive rate hikes totalling 4,150 basis points up to 50 per cent in March 2024 in an abrupt shift to orthodox policy after years of low rates aimed at stoking growth.

After two months of rate cuts, the policy rate TRINT=ECI now stands at 45 per cent and is expected to fall to 30 per cent by the end of the year.

In January, monthly inflation climbed more than expected to 5.03 per cent due to a minimum wage hike and several new-year price revisions, while annual inflation fell to 42.12 per cent, data showed on Monday. Annual inflation had peaked above 75 per cent in May last year.