Central Bank Governor Fatih Karahan said inflation is expected to stand between 25% and 29% at the end of 2025, and between 13% and 19% in 2026.
Presenting the year’s third Inflation Report, Karahan said the bank maintained its interim inflation target of 24% for the end of 2025 from the previous quarter’s report.
“We have set our inflation targets for 2026 and 2027 at 16% and 9%, respectively,” he said, noting that previous forecasts were 12% and 8%. The medium-term goal remains 5%.
Karahan said Turkey is gradually reaping the benefits of tight monetary policy, and the disinflation process continues. While inflation is slightly below the upper band of the forecast range, sticky service inflation and high rental inflation continue to pose risks.
Karhan said that consumer inflation in July was 42 percentage points lower than the May 2024 peak, and preliminary data for August pointed to a continued gradual slowdown in the main trend.
He stated that provisional data for July pointed to an improvement in the trade balance and predicted that the current account deficit would remain at around 1.3% of GDP in the second quarter.
Asked why the bank has started to announce interim targets as well as its forecast of the range of inflation, Karahan said, “In our communications to date, interim targets also served as forecasts. This made monetary policy communication difficult. We decided to separate the two.”
