Turkish central bank sets new interim targets for inflation
Presenting the bank's quarterly inflation report in Istanbul, Governor Fatih Karahan said inflation was currently projected to be between 25% and 29% in 2025 and between 13% and 19% in 2026.
"We have decided to change the framework for presenting medium-term forecasts," Karahan said. "We will present 'interim targets' that will not be changed unless extraordinary circumstances occur between report periods."
"The 'year-end interim targets' will serve as a commitment and anchor," he said.
Last month, Turkey's central bank cut interest rates by 300 basis points to 43%, resuming an easing cycle that had been disrupted by political turmoil earlier this year, as markets have since calmed and disinflation continued.
Annual consumer price inflation fell to 33.52% in July, sustaining a downward trend after hitting a peak of 75% in May last year.
The bank was keeping its 24% end-2025 inflation forecast as its interim target for the year, with interim targets of 16% and 9% set for 2026 and 2027 respectively, Karahan said, adding that forecasts will continue to be announced in inflation reports.
"Interim targets will serve as a reference in determining the endogenous monetary policy path, ensuring that inflation converges to the interim targets within the control horizon," he said, noting that this period was between 12 and 24 months.
He said the bank foresees inflation stabilising at 5% in the medium term.
"During the disinflation process, we will maintain our tight monetary policy stance to achieve our interim targets," he said.
The lira was little changed at 40.79 against the dollar after the report's release.
Before last month's rate cut, the bank had hiked its policy rate to 46% from 42.5% in April, reversing an easing cycle that had begun in December, following market volatility over the arrest in March of Istanbul Mayor Ekrem Imamoglu, who is President Tayyip Erdogan's main rival.
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