Turkey’s central bank on Thursday kept its year-end inflation forecast unchanged at 24 percent in its second inflation report of 2025, signaling that price pressures remain elevated amid global uncertainties, the state-run Anadolu news agency reported.
Central Bank Governor Fatih Karahan presented the outlook during a press briefing at the İstanbul Finance Center, outlining updated projections through 2027.
The bank maintained its 2025 year-end forecast at 24 percent, consistent with its February revision from 21 percent. It projects inflation to decrease to 12 percent in 2026 and to 8 percent by the end of 2027. The forecast range for 2025 remains at 19 to 29 percent, reflecting heightened uncertainty, particularly in global food and energy markets.
“We will always be ready to tighten our monetary policy stance in the event we foresee a significant and persistent deterioration in inflation,” Karahan said at the briefing.
Turkey has experienced double-digit inflation since 2019, making life increasingly expensive for millions of people, notably hitting the cost of education, housing, healthcare, food and transportation.
Food and fuel forecasts
The central bank raised its food inflation estimate for 2025 to 26.5 percent, up from a previous forecast of 24.5 percent. It also revised its projection for the average price of oil to $74 per barrel, down from $76.5.
Karahan noted that falling commodity prices are expected to support disinflation, although he warned that a late-season agricultural frost had intensified pressure on food prices.
The bank reiterated its medium-term target of achieving single-digit inflation by 2027. The forecast range for 2026 stands at 6 to 18 percent, reflecting continued risks tied to domestic consumption and global price volatility.
Policy stance and market volatility
Karahan also addressed volatility in Turkish financial markets in March, attributing it to a temporary wave of global risk aversion.
Investor sentiment deteriorated sharply following the arrest of İstanbul Mayor Ekrem İmamoğlu, a prominent opposition figure, on corruption charges that critics say were politically motivated.
The Turkish lira briefly fell to record lows against the US dollar, and sovereign bond yields spiked as markets reacted to concerns about political stability and the rule of law.
“From day one, we implemented steps to reinforce our tight monetary stance,” he said. “As a result of the measures we took, investor risk perception has improved.”
Following the arrest of İmamoğlu, the most powerful political rival of President Recep Tayyip Erdoğan, Finance Minister Mehmet Şimşek pledged to do “whatever is necessary” to shore up financial markets.
He said that Turkey continued to offer good long-term investment opportunities. Together with Karahan, he reaffirmed Erdoğan’s commitment to maintaining the investor-friendly policies pursued over the past two years to prevent a selloff of the Turkish lira.
Meanwhile, the central bank raised its key interest rate by 350 basis points to 49 percent in April, following a series of aggressive hikes over the past year aimed at reversing inflationary trends and restoring investor confidence.
Persistently high inflation
Consumer inflation in Turkey remains among the highest in the G20, driven by years of unorthodox monetary policy and a series of currency crises. According to reports, price increases in essentials such as housing, food and transportation have outpaced wages, placing significant strain on Turkish households.
Turkey has experienced double digit inflation since 2019, with the annual rate peaking at 85.5 percent in October 2022. It has declined over the years and currently stands at around 38 percent, according to official data.
The central bank began a policy pivot under Karahan’s predecessor, Hafize Gaye Erkan, in mid-2023, raising rates after years of politically pressured cuts under Erdoğan. Erkan resigned in February 2024, citing personal reasons, and was succeeded by Karahan, an economist who previously served as deputy governor.
The current administration has vowed to maintain tight monetary policy until inflation is decisively brought under control, but analysts warn that political pressure ahead of the 2028 elections could complicate the bank’s path to price stability.