The rate cut was below expectations with 100 bps
22 January 2026
CBRT cut its policy interest rate by 100 basis points (bps), less than expected, setting it at 37.0%. Overnight lending and borrowing rates were also reduced by the same amount, to 40.0% and 35.5% respectively, maintaining the width of the asymmetric interest rate corridor.
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The budget deficit remained significantly below the MTP target in 2025
15 January 2026
The central government budget posted a deficit of TRY528.1 billion in December, exceeding the Treasury’s cash balance (TRY333.1 billion). The primary deficit was TRY411.5 billion.
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Widespread increase in industrial production in November
09 January 2026
The Industrial Production Index (IPI), adjusted for seasonal and calendar effects (m.a.), increased by 2.5% month-on-month (mom). On an annual basis, the IPI decreased by 0.5%, but when adjusted for calendar effects (one working day less than last year), it recorded an increase of 2.4% year-on-year (yoy), close to the increase in October
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Widening trade deficit due to imports signals no slowdown in economic activity in Q4
05 January 2026
According to the provisional data released by the Ministry of Trade, exports increased by 12.8% year-on-year (yoy) to $26.4 billion, while imports rose by 11.2% yoy to $35.8 billion in December. Thus, the trade deficit increased by $0.6 billion yoy, reaching $9.4 billion.
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The trend at the end of the year points to inflation above the 2026 targets
05 January 2026
Monthly inflation in December was 0.89%, in line with our forecast (0.9%). Market expectations were slightly higher at 1.0%. As a result, annual inflation fell by 0.2 percentage points to 30.9%, remaining slightly below the forecast range (31%-33%) shared by the CBRT in its latest Inflation Report.
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Signals for demand remain strong, while being relative weak for production
28 December 2025
The recovery trend continued in the RSCI (s.a.). The seasonally adjusted index rose by 0.5 points in December to 103.7, reaching its highest level since November 2023 and once again exceeding its long-term average, indicating an improving outlook in the manufacturing sector.
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The trend continued to deteriorate in October
12 December 2025
The current account balance recorded a $0.5 billion surplus in October, slightly below our estimate ($0.8 billion) and slightly above the market estimate (+$0.2 billion). The cumulative current account deficit for the first 10 months of the year reached $14.5 billion, while the 12-month cumulative deficit increased from $20.3 billion to $22.0 billion due to base effects
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"Slowdown narrative" not confirmed by the data
01 December 2025
In 2025Q3, GDP grew by 3.7% yoy, below market expectations (4.2%) and close to our model estimates (3.8%). Thus, the Turkish economy grew 3.7% yoy over the first three quarters of the year. Seasonally and calendar adjusted (s.a.) GDP grew 1.1% qoq in the third quarter.
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Ambitious targets, hawkish communication, costly macro backdrop
07 November 2025
CBRT kept its interim targets, which it had committed to achieve by separating them from the inflation forecasts in the previous reporting period, unchanged at 16% and 9% for the end of 2026 and 2027, respectively.
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Expectations remained largely unchanged from last month
15 August 2025
The year-end exchange rate expectation rose by 0.24 TL compared to the previous survey period, reaching 44.0. Based on today's value (»40.9), an increase of approximately 7.5% in the exchange rate is expected by the end of the year.
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Demand conditions limit production, while exchange rate increases production costs
30 May 2025
The slowdown in production due to domestic and external demand conditions extended to the 14th month. The decline in May was at the highest rate since October.
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Economic growth regained momentum in the last quarter
28 February 2025
In 2024Q4, GDP grew by 3.0% yoy, in line with our forecast and the average market expectation, and by 1.7% qoq in seasonally and calendar-adjusted terms.
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CBRT revised inflation forecasts upwards but will not respond to the inflationary outlook with a tighter monetary stance
08 November 2024
In the 2024-IV Inflation Report, the CBRT raised its year-end inflation forecasts for 2024, 2025 and 2026 to 44%, 21% and 12%, respectively (Chart 1).
In the previous Inflation Report, the forecasts were 38%, 14% and 9%, respectively. The uncertainty band around the inflation forecasts has been revised to 42%-46% for 2024 and 16%-26% for 2025, while it has been set at 6%-18% for 2026.
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Annual headline inflation increased to 83.45% yoy, with the core C hitting 68.09%
03 October 2022
CPI inflation was below the market expectations in September with 3.08% monthly increase. As a consequence, annual inflation rose from 80.21% to 83.45%, setting another yoy record in the revised series (2003=100).
The continuing upward trend in inflation was mainly driven by the contribution of housing, food, household equipment, restaurants-hotels and transportation. Core-B index also hiked by 2.74% MoM, bringing its annual rate to 74.63%, up from August’s 72.53%.
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CBRT decision: Emphasis on risks on global growth and inflation
23 June 2022
Risks on global growth and already high global inflation continue. The divergence of monetary policy steps and communications of developed countries' central banks are increasing due to their diverse economic Outlook.
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