07.11.2025 12:07
The President of the Central Bank of the Republic of Turkey, Fatih Karahan, announced the fourth inflation report of the year. The inflation forecasts, which were estimated to be in the range of 25-29% in the third report, have been revised upwards. Fatih Karahan stated, "We expect inflation to be in the range of 31% to 33% by the end of 2025. For the end of 2026, we anticipate that inflation will decrease to a range of 13% to 19%."
The Central Bank of the Republic of Turkey (CBRT) announced its inflation forecasts at the end of the 2025 Inflation Report meeting, where CBRT President Fatih Karahan presented the predictions.
2025 INFLATION RAISED FROM 25 TO 33
Karahan reminded that the inflation expectation announced as 24% in the second meeting for the year 2025 was raised to a range of 25-29% in the third report. In the final report of the year, this expectation was increased to a range of 31-33%.
2026 INFLATION FORECAST: BETWEEN 13-19%
For the year 2026, Karahan stated that the forecast of 12% in the second report was revised to a range of 13-19% in the third report, and this range was maintained in the final report of the year.
DISINFLATION PROCESS CONTINUES
Fatih Karahan stated that the disinflation process, which started in June 2024, has slowed down recently, but it will progress in line with the targets with the measures to be taken. Karahan said, "We will continue to use all monetary policy tools decisively."
Pointing out that global uncertainties remain above historical averages, Karahan emphasized that the global disinflation process has lost momentum, but the demand composition in Turkey has balanced.
Karahan stated that the demand composition is compatible with the disinflation process and that the capacity utilization rates confirm the slowdown in activity. He reported that the Composite Labor Market Index continues its weak trend and that card expenditures remained stable in the third quarter.
Karahan noted that the current account deficit is in line with the domestic demand outlook and predicted that the ratio of the current account deficit to national income will remain below the long-term average in 2025.
RESISTANCE IN EDUCATION AND RENT CONTINUES
Karahan stated that resilient price increases in education and rents continue, saying, "We see that the inertia in service inflation maintains its resilient trend." He noted that while rent inflation remains higher than expected, it has slowed down in recent months.
"WE ARE MAINTAINING A TIGHT MONETARY STANCE"
Karahan expressed that the tight monetary policy stance is maintained and supported by macroprudential measures. He pointed out that financial conditions remain tight and emphasized that the outlook for credit growth is favorable for the Turkish Lira.
Karahan noted a slowdown in individual and commercial credit growth, stating that the share of TL deposits is around 60%, while the foreign currency deposit balance has reached 239 billion dollars.
KKM ACCOUNTS WILL CLOSE BY THE END OF THE YEAR
Karahan stated that the balance of Currency Protected Deposit (KKM) accounts has fallen below 4 billion dollars, saying, "By the end of this year, KKM accounts will largely be closed."
INFLATION FORECASTS HAVE BEEN RAISED
Karahan indicated that the end-of-2025 inflation forecast range is between 31-33%, and the end-of-2026 forecast will be in the range of 13-19%, announcing that they have maintained the intermediate targets of 24% for 2025, 16% for 2026, and 9% for 2027.
"WE WILL CONTINUE TO TAKE INTEREST RATE STEPS BASED ON MEETINGS"
Karahan emphasized that decisions regarding the policy interest rate will continue to be made on a meeting basis, stating, "Price stability is a prerequisite for sustainable growth and social welfare. We will do whatever it takes to reduce inflation in line with the intermediate targets we have set."
VOLATILITY IN THE FOREIGN EXCHANGE MARKET
In response to questions, Karahan announced that they are conducting buying and selling transactions to manage excessive volatility in the foreign exchange market. He stated that there is about 2% rigidity in inflation, saying, "There is a very slow down rather than a stop on the disinflation side."
Regarding the last interest rate cut, he stated, "We did not see a deterioration that would require us to stop interest rate cuts; we only changed the size of the step."