Economist Mahfi Eğilmez has shared his 2025 year-end inflation forecast, stating, “My year-end inflation prediction is between 35-40%. I’m still sticking to that. Growth will face some difficulties here. The 4th quarter growth forecasts are showing negative figures.” Regarding interest rate cuts, he mentioned, “A 2.5-point cut in interest rates is appropriate. A 47.5% interest rate is perfectly normal when inflation is around 44%.”
Key points from Eğilmez’s comments on CNBC-e’s “Ekonomi 4” program include:
- Year-End Inflation Estimate: Eğilmez maintains his forecast of inflation being between 35-40%. He noted that growth could be challenging and that the growth projections for the fourth quarter appeared to be negative. He mentioned that government increases were generally below the revaluation rate and that inflation might not fall sharply, despite factors like the removal of price caps on school fees and rents, which might reduce inflationary pressure.
- Interest Rate and Inflation: Eğilmez believes that a 2.5% reduction in interest rates is appropriate. He noted that an interest rate of 47.5% was reasonable when inflation was at around 44%. He also pointed out that interest rates should stay a few percentage points higher than inflation during periods of inflationary decline but should move ahead of inflation when it starts to rise.
- Wage Increases: Referring to the wage increases for public employees and pensioners, Eğilmez argued that the difference in raises between SSK (Social Insurance Institution) and Bağ-Kur retirees was problematic. He suggested that if the correct raise was 15.75%, it should have applied equally to all, followed by an additional 3% for SSK and Bağ-Kur retirees.
- TÜİK Independence: He emphasized the importance of TÜİK (Turkish Statistical Institute) being independent and operating on a meritocratic basis. He proposed that TÜİK should create a “Salaried Workers’ Living Index” to help guide wage increases, as it already tracks a basket of over 400 items for its CPI index.
Eğilmez also recognized the success of Mehmet Şimşek’s management in bringing inflation down from higher levels but emphasized that the previous economic management’s failure needed to be considered when evaluating the current situation. He also referred to the significant impact of base effects and interest rate increases on inflation reduction.
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