TCMB Increases Year-End Inflation Forecast to 24 Percent

The update of inflation forecasts by the Central Bank of the Republic of Turkey (CBRT) Governor Fatih Karahan is an important development for the Turkish economy. The CBRT's 2025-point increase in its inflation forecast for 3 to 24% shows that inflation is more resilient than expected and that the monetary tightening process may continue.

Central Bank Inflation Forecasts and Policy Messages

According to President Karahan's statements:

• Inflation forecast for 2025 is 24% It was updated as .
• 2026% for 12 inflation is predicted.
• 2027% in 8 is expected to decline to the level of.
• In the medium term, inflation is targeted to stabilize at 5%.

These estimates give the message that the CBRT will maintain its tight stance in monetary policy. At the same time, they show that the fight against inflation will be a long-term process.

Reasons for the Increase in Inflation Forecast

There may be several reasons why the CBRT may raise its 2025 year-end inflation forecast:

1. Exchange Rate Pass-Through: Fluctuations in exchange rates put pressure on inflation.
2. Cost Inflation: Uncertainties in global energy and commodity prices may push inflation up.
3. Request Conditions: Strong domestic demand may trigger price increases.
4. Management of Expectations: An upward trend in inflation expectations may affect pricing behavior.

What Will Be the Monetary Policy of the Central Bank?

It is thought that the Central Bank may maintain its tight stance on interest rate policy, taking into account inflation expectations. According to current data:

• Interest rate hikes may continue or the current high interest rate level may be maintained.
• The process of liquidity management and monetary tightening may continue.
• Tight monetary policy may continue to be implemented to reduce inflation expectations.

What to Expect in the Coming Period?

1. Market reaction: The upward revision of inflation forecasts by the Central Bank will be closely monitored in the markets. Investors will focus on how monetary policy will be shaped.
2. Interest rate decisions: Whether the CBRT will make changes to interest rates in the coming months will be important.
3. Relationship between foreign exchange and inflation: Exchange rate fluctuations will continue to have an impact on inflation.

These statements show how determined the Central Bank is to fight inflation. However, how accurate the inflation forecasts will be and how the economy will take shape during this process will become clearer over time.