Turkey’s Central Bank announced an increase in its inflation forecast for 2025 from 21% to 24% due to factors that, according to the bank’s governor Fatih Karahan, are beyond the Central Bank‘s policy control: ‘Therefore, they are not an indicator of any easing of monetary policy,’ he said, promising to ‘do whatever is necessary to lower inflation.’
During Friday’s presentation of the quarterly inflation report, reported by several Turkish media, Karahan said that the price increase forecast for 2026 remains unchanged at 12%, while for 2027 ‘we expect inflation to fall to 8%’, with the long-term goal of stabilising at around 5%.
Year-on-year inflation in Turkey fell to 42.1% in January, although it rose by 5.03% compared to the previous month, partly driven by the increase in the minimum wage. In this regard, Karahan stressed that ‘we will resolutely maintain our tight monetary policy until the decline in inflation is sustained and price stability is achieved’.
With regard to future interest rate cuts, the governor of the Turkish Central Bank pointed out that their number and extent will depend on how inflation develops in the coming months: ‘We are not on autopilot (with regard to rate cuts). If the inflation outlook deteriorates, we will consider all options,’ he announced. The Central Bank’s last rate cut on 23 January was 250 basis points; the next meeting where further cuts could be announced is on 6 March.
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Edited and reviewed by:
Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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