Turkey Central Bank Keeps 2025 Inflation Forecast at 24%, Ready to Tighten

Turkey's central bank maintained its year-end inflation forecast at 24% for 2025, with projections of 12% for 2026 and 8% for 2027, signaling a steady outlook despite recent market volatility. Governor Fatih Karahan emphasized the bank's readiness to tighten monetary policy if inflation worsens, highlighting the recent policy rate increase of 350 basis points to 49% in response to political and economic turbulence. The central bank reversed its easing cycle amid currency instability following the arrest of Istanbul's Mayor, aiming to control inflationary pressures and support disinflation through tighter monetary measures. Despite the bank's forecast, market expectations suggest a higher year-end inflation rate of around 30.4%. Karahan confirmed that the bank will continue necessary actions to bring inflation down and maintain a tight monetary stance to mitigate upward inflation risks. The Turkish lira showed some stabilization against the dollar during the inflation briefing, reflecting market reactions to the central bank's policy stance.