14.08.2025 18:53
The President of the Central Bank of the Republic of Turkey, Fatih Karahan, announced the third inflation report of the year. Karahan stated that they have kept the inflation forecast for 2025 at 24 percent, while the forecast for 2026, which was 12 percent, has been raised to 16 percent, and the forecast for 2027, which was 8 percent, has been increased to 9 percent.
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The President of the Central Bank of the Republic of Turkey (CBRT), Fatih Karahan, announced that the inflation forecast for the end of 2025 is maintained at 24% (interim target), while it has been raised from 12% to 16% for 2026 and from 8% to 9% for 2027.
INFLATION TARGETS HAVE ALSO BEEN REVEALED
Karahan announced the 3rd Inflation Report of the year at the CBRT Campus in Istanbul Financial Center. The Central Bank has introduced a new practice by revealing not only inflation forecasts but also interim targets. While the inflation forecast for the end of 2025, which was 24%, is maintained as the interim target for 2025, it was stated that inflation could be in the range of 25% to 29% at the end of 2025.
Karahan stated, "We are maintaining the 24% value, which is our inflation forecast for the end of 2025, as our interim target for 2025. For 2026 and 2027, we have set our interim inflation targets at 16% and 9%, respectively." Karahan had previously announced during the presentation of the 2nd Inflation Report of the year that the inflation forecast for the end of 2025 is maintained at 24% and the inflation forecasts for 2026 and 2027 are kept at 12% and 8%, respectively.
"WE WILL CONTINUE TO USE MONETARY POLICY TOOLS"
Highlights from Karahan's statements are as follows: "We are gradually receiving the results of the tight monetary policy. The disinflationary effect of demand conditions has increased with the tight monetary policy. In the upcoming period, we will continue to use all monetary policy tools. We value the progress we have made towards achieving price stability.
Global trade policy uncertainty and geopolitical risks continue to remain high. The global growth outlook is still weak compared to the beginning of the year. Supply increases have limited the rise in energy prices due to geopolitical developments. Portfolio preferences in global markets have predominantly been towards equities."
"GROWTH IN PRODUCTION SLOWED IN THE SECOND QUARTER"
"As a result of the tight monetary policy, the composition of demand has become more balanced. It is observed that the contribution of private consumption to growth has significantly declined. In the second quarter, the growth of production indicators slowed down. Survey-based indicators indicate a weakening outlook in the industry. Preliminary data for July indicates an improvement in the foreign trade balance. Under this outlook, we estimate that the ratio of the current account deficit to national income will be around 1.3% in the second quarter. Leading data indicates that the slowdown will continue in August. The disinflation process continues uninterrupted. Inflation occurred slightly below the upper band of the forecast range. Consumer inflation in July was recorded 42 points lower compared to the peak in May 2024; preliminary data for August indicates a continued gradual slowdown in the main trend. Although inflation has been lower than market expectations in the last three months, the inertia in services continues to pose a risk above our forecasts."
"CLIMATE CONDITIONS AFFECT FOOD PRICES"
"In the food group, despite agricultural frost, we are seeing a slowdown in inflation. Climate conditions continue to have an impact on food prices. We are observing that drought has become pronounced in some regions due to rising temperatures in recent months. This situation increases the upward risks on food prices. The tendency to index past inflation remains high, slowing down disinflation. In the next two months, we will monitor the effects of developments in private university fees. Rent inflation is showing a more resilient trend than expected. It is anticipated that rent inflation will continue to decline. A gradual decrease in inflation is expected to continue. However, even if expectations improve, it still remains above our inflation forecasts."
WE CONTINUE TO MAINTAIN TIGHT MONETARY POLICY
"We continue to maintain tight monetary policy and gradually receive its results. Our stance on tight monetary policy will ensure the continuation of the disinflation process. Financial conditions remain tight. After the July Monetary Policy Committee decision, consumer loan rates decreased by 5.3 points and commercial loan rates decreased by 5.5 points compared to the first week of July. The composition of commercial loans is changing in favor of the Turkish Lira. It is of great importance that consumer loans continue at a level that supports the balancing of domestic demand."
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