The Turkish Central Bank announced on Thursday new inflation targets as part of a new communication strategy by the bank, setting an interim target of leaving inflation at 24% by the end of 2025 and 16% by the end of 2026.
During the presentation of the third quarterly inflation report in Istanbul, the governor of the Central Bank of the Republic of Turkey (TCMB), Fatih Karahan, announced that the bank expects inflation to be between 25% and 29% by the end of this year, while by the end of 2026 it expects CPI to be between 13% and 19%, according to several Turkish media reports.
Karahan explained that starting with this quarterly report, the central bank has decided to change the way it presents medium-term price increase forecasts: “We will present ‘temporary targets’ that will not be changed unless extraordinary circumstances occur between each report,” said the governor, who added that, as part of the new communication approach of the entity he presides, two different concepts will be mentioned: firstly, ‘forecasts (of inflation)’ to be announced with each quarterly report, and secondly, ‘interim year-end targets ’, which Karahan said will serve as a “commitment” and an “anchor” to set limits on price increases.
Despite these changes, the central bank maintains in its announcement the 24% inflation forecast for the end of 2025 that it had already anticipated in its previous quarterly report: “We maintain the 24% inflation forecast for the end of 2025 as our interim target for that year. For 2026 and 2027, we have set our interim inflation targets at 16% and 19%,” the governor said.
Last July the Turkish Central Bank announced an interest rate cut of 300 basic points in line with the disinflation process initiated in mid-2024. Continuing this disinflationary trend, Turkey’s inflation rate fell to 33.52% last July, a drop even further than analysts’ forecasts, falling to its lowest level in 4 years.
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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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