Turkish central bank raises inflation forecasts, pledges tight policy

Detailed summary

Turkiye's central bank raised its end-2027 inflation forecast to 21% and its end-2028 forecast to 13.5% on Thursday, with Governor Fatih Karahan saying ...

Turkiye's central bank raised its end-2027 inflation forecast to 21% and its end-2028 forecast to 13.5% on Thursday, with Governor Fatih Karahan saying the bank would maintain a tight policy stance until prices stabilise.

The end-2027 forecast was previously 15% and the end-2028 forecast 9%.

"We will maintain our tight monetary policy stance to ensure continuation of the disinflation process and a decline in inflation in line with the interim targets," Karahan said in his presentation on the bank's quarterly inflation report.

He said the bank raised its end-2026 inflation forecast to 29.5% from 28% on Thursday while keeping its interim target at 24%.

The targets for end-2027 and end-2028 were the same as the forecasts and Karahan said the changes should not be read as signalling policy change.

"This update does not carry an easing signal in monetary policy," he said.

Karahan said that the bank would maintain tight policy for disinflation, and that supply-side shocks caused by geopolitical developments were limiting the fall in inflation.

The lira weakened slightly to 50.2575 against the dollar after the presentation, compared with a close of 50.2325 on Wednesday.

In its previous report in August, the central bank had raised its end-2026 inflation forecast to 28% from 26% but left its interim inflation target for the same period at 24%. At the time, it also kept its end-2027 target at 15% and the target for end-2028 at 9%.

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