Turkish President Recep Tayyip Erdogan said that the net monthly minimum wage in Turkey will reach 22,104 Turkish liras ($630.36) in 2025, an increase of 30% from 2024.
Economists expect that increasing the minimum wage will lead to higher inflation in the coming months. The decision affects about 9 million workers and is seen as a standard for increasing private sector salaries.
Investors have warned that any increase above 30% could derail the central bank’s inflation forecasts and complicate the timing of a potential first interest rate cut since February 2023, as the minimum wage is seen as one of the key factors determining Turkish economic policy.
Türkiye’s inflation rate fell to 47.09% in November from an annual high of 75% in May.
Bloomberg quoted Silva Demiralp, a professor at Koç University in Istanbul, as saying, “Since wages are adjusted according to the expected inflation of 2025, this would make the central bank’s task easier… The possibilities of lowering interest rates are higher now.”
Interest
Policymakers expect inflation to decline to 21% by the end of next year from the current 47.1%, and the Central Bank’s Monetary Policy Committee will announce its decision on the interest rate tomorrow, Thursday, as most economists – whose opinions were polled by Bloomberg – expect a reduction from 50%.
