Türkiye's central bank believes it has done enough when it comes to monetary policy tightening, the country's economy chief said on Tuesday, a day after a stronger-than-expected inflation reading led global banks to add new interest rate hike forecasts.

"The central bank considers that it has made sufficient tightening," Treasury and Finance Minister Mehmet Şimşek told a conference in Istanbul.

"We have to be patient and committed going forward," Şimşek said, expressing belief in the effectiveness of the government's medium-term program, which he says is still in the early stages.

Official data on Monday showed Türkiye's annual inflation rate climbed to 67.07% in February, exceeding expectations and keeping up the pressure for tight monetary policy amid strong rises in food, hotel and education prices.

Shortly before the data, Şimşek said inflation would remain high in the coming months due to base effects and the delayed impact of rate hikes but would fall in the next 12 months.

The Central Bank of the Republic of Türkiye (CBRT) has hiked interest rates by 3,650 basis points since June but has now paused its tightening cycle, saying that the current 45% policy rate is sufficient to bring inflation down.

Still, it said the policy could be tightened "in case a significant and persistent deterioration in inflation outlook is anticipated."

Officials have repeatedly said inflation is envisaged to peak by the middle of the year and enter a steep downward trend as of the second half of 2024.

Şimşek's remarks came after some economists expressed a growing prospect of more tightening sometime after nationwide local elections on March 31, given the price pressure and strong domestic demand.

The minister said authorities were planning additional selective credit and quantitative tightening steps.

He highlighted that Türkiye was still in "a transition period" to a disinflation path. "Disinflation will come, (as) monetary policy works, but it works with lags."

On Monday, JPMorgan added another 500 basis point interest rate hike to their forecasts for the country in April, a move that, if correct, would hoist the headline rates to 50%.

The U.S. investment bank previously expected CBRT's recent hike to be the last of the current cycle.

"Headline CPI inflation came in at 4.5% m/m in February, much higher than our expectation of 4.2% and the market consensus of 3.8%," JPMorgan said in a research note.

Month-over-month consumer price inflation (CPI) came in at 4.53%, down from 6.70% in January but above market forecasts.

Şimşek on Monday said the government's main target was to bring inflation down to single digits. But, he acknowledged that "currently, we are far from price stability, but that is our target."

According to Şimşek, inflation "will be back on trend as of March. It will become in line with our disinflation path."

Last month, the central bank maintained its 36% year-end inflation target and vowed to keep policy tight for longer to bring inflation down to the forecasted path.

However, JPMorgan kept its year-end policy rate forecast of 45%, saying the central bank might cut its policy rate in November and December.

Correction in monetary policy

Şimşek is leading the new economy administration of technocrats that has delivered aggressive tightening aimed at arresting inflation, curbing chronic deficits, rebuilding foreign exchange reserves and stabilizing the lira.

After last year's general and parliamentary elections, the team was installed and reversed the yearslong monetary easing cycle.

Şimşek on Tuesday said Türkiye has a program aiming to achieve price stability, restore fiscal health, narrow the current account deficit, rebalance growth, and implement structural reforms to boost productivity and competitiveness.

"There has been a course correction in monetary policy. So we call it monetary policy normalization, which means tightening," he noted.

The compound interest rate is currently 56%, one year ahead of inflation, which markets expect to be roughly about 38%, he noted.

The transition period will last until this June, followed by a speedy disinflation period, Şimşek underlined.

On the country's official reserves, he said they have improved significantly since last May.

He also said Türkiye is reviewing expenditures and combating informal economic activity.

Good infrastructure development

Saying that Türkiye needs investments in energy, fiber optics and the green transition, Şimşek invited the private sector to participate in public-private partnership projects.

"As the government, we have invested about $258 billion over the past 20 years in infrastructure (and) as the government, we need to invest another $200 billion," he noted.

He said that Türkiye has done well in road infrastructure and airports and is building a high-speed railway network, in which it needs to invest at least $70 billion over the next 30 years.

"Because that is key to competitiveness, that is also key to sustainability and resilience," the minister added.