Turkey’s inflation will peak in April before falling to single digits by the June 2023 general elections, the treasury and finance minister said Thursday as he underlined that the country will stick to its current policies, ruling out the possibility of an interest rate hike.

Nureddin Nebati made the comments in an interview published Thursday in the financial newspaper Nikkei Asia, in which he noted that he expects the lira to stabilize this year.

On the predicted peak in inflation, Nebati said he does not believe Turkey will see 50%, adding "I hope I am not wrong.”

The minister's comments came before the country's statistical institute, TurkStat, on Thursday reported a 48.7% increase in the consumer price index (CPI) in January compared to the previous year, representing the fastest increase in the index since April 2002.

Nebati acknowledged that Turkey has a "serious inflation problem ahead" but added that similar problems are being experienced around the world.

"We expect high inflation in January, and then it will maintain its level for some time. In the summer it will start to show recovery and will radically decline in December due to the base effect," he said.

Speaking about the economic administration's potential toolbox to fight inflation, Nebati said, “of course, we think of instruments for protection against inflation, but for now we have no such need.”

He reiterated that Turkey's new economic model based on low-interest rates will boost production, employment and exports while solving the country’s current account deficit problem and contribute to stabilizing the lira.

The Central Bank of the Republic of Turkey (CBRT) last month also revised up its forecast for inflation at the end of 2022 to 23.2% from 11.8%.

The bank paused a four-month streak of interest rate cuts in January, providing relief for the lira, which has held largely steady this year.

The lender cut the benchmark rate by a cumulative 500 basis points to 14% between September and December last year.

President Recep Tayyip Erdoğan over the weekend once again rejected the conventional understanding that high borrowing costs help bring down consumer prices by limiting demand and slowing economic activity.

"You know my fight against interest rates," he said.

"We're going to bring down the rate and we are reducing the rate. Know that inflation will fall – it will fall further."

Offering an incentive to stop the inclination to convert lira to forex and protect the local currency’s value, the government recently introduced a currency-indexed lira deposit plan that pledged to compensate any loss if the currency depreciates more than the interest payment of the account.

The lira lost 45% of its value against the U.S. dollar last year before the interventions by the central bank and the announcement of the new measure.

Nebati assured that since the lira suffered a great loss in value last year, "we do not expect further negative developments in the lira, hence we do not expect further depreciation."

“There will be no imbalance between the forex rate when I was appointed and the forex rate at the end of this year. To sum up, there will be no pessimism in Turkey regarding forex rates,” he said.

In the interview, the minister said that while the CBRT did, directly and indirectly, intervene before the new deposit plan kicked in, the bank does not intend to carry out any substantial interventions now the plan has been introduced. “Even if there were after the announcement, they should be small touches.”

The new deposit plan has attracted a total of more than TL 272 billion ($20 billion), with TL 113 billion coming from conversions from forex accounts as of Tuesday, according to the minister's figures.

The lira fell 0.8% on Thursday in its third consecutive session of decline following the release of inflation data.

The US dollar/Turkish lira exchange rate rose to 13.6170 as of 9.30 a.m. local time (0630GMT), from 13.5410.