Ankara: The Turkish Central Bank (CBRT) announced on Thursday that it anticipates annual inflation to decrease to 24% by the end of this year and further to 16% by the close of 2026.
According to Anadolu Agency, Central Bank Governor Fatih Karahan, speaking at a press conference in Istanbul, revealed that inflation is expected to range between 25% and 29% by the end of 2025. Projections for the end of 2026 suggest a reduction in inflation to somewhere between 13% and 19%. Karahan also set interim inflation targets of 16% for 2026 and 9% for 2027, with an eventual stabilization at 5% in the medium term.
Karahan explained the increase in the year-end 2026 inflation estimate by four percentage points is due to factors such as higher food prices, the underlying inflation trend, and Turkish Lira-denominated import prices. He noted that a recent reduction in global trade uncertainty, following the announcement of tariff rates, has slightly improved global growth expectations, leading to an upward revision of foreign demand assumptions.
The bank has also revised its crude oil and import price assumptions upward due to rising commodity prices spurred by geopolitical tensions, while food price assumptions for 2025 remain unchanged compared to the previous report but have been revised upward for 2026.
Karahan stressed the importance of keeping domestic demand at disinflationary levels through monetary policy measures. He indicated that future steps would be aligned with ensuring the necessary tightness for interim targets, based on inflation realizations, trends, and expectations.
Karahan asserted that a cautious stance will be maintained, supporting a gradual decline in inflation. The bank's firm monetary policy is expected to aid the disinflation process via a rebalancing of domestic demand, appreciation of the Turkish lira, and improvement in inflation expectations.
He emphasized the ongoing decline in services inflation and underlying inflation trends will continue through 2025, with fiscal policy coordination also playing a role. Karahan concluded by affirming the bank's commitment to a tight monetary policy stance until price stability is achieved, adapting policy rates to ensure alignment with the envisioned disinflation process.
Karahan underscored the bank's cautious, meeting-based approach to policy rate decisions, emphasizing a focus on the inflation outlook and the readiness to employ all monetary policy tools if significant and persistent inflationary pressures arise.