Turkey's February inflation hits 67.07%, raises policy concerns

Turkey's annual inflation rate surged to 67.07% in February, surpassing expectations and sustaining pressure for a stringent monetary policy. Finance Minister Mehmet Simsek acknowledged that inflation would remain high in the coming months due to base effects and the delayed impact of previous rate hikes.

The central bank, which has raised interest rates by 3,650 basis points since June, has paused its tightening cycle, asserting that the current 45% policy rate is adequate to curb inflation. However, economists anticipate the possibility of renewed tightening after nationwide local elections on March 31, given persistent price pressures and robust domestic demand. Month-on-month consumer price inflation stood at 4.53%, slightly lower than January but above expectations.

Despite the lira's 6% decline this year, authorities aim for a stable currency. Restaurants, hotels, and education prices experienced significant increases in February.