Strong growth and inflation inertia likely to limit interest rate cuts
04 September 2025
Monthly inflation was 2.04%, above our forecast (monthly 1.7%; annual 32.5%) and market expectations (monthly ≈1.8%; annual 32.6%). As a result, annual inflation declined from 33.5% to 32.95%. The seasonally adjusted (s.a.) CPI monthly increase, calculated using a direct approach, rose to 2.6% compared to the previous month (2.3%).
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Significant improvement in the trade balance in August
03 September 2025
According to the provisional data released by the Ministry of Trade, foreign trade deficit decreased by $0.8 billion in August compared to the same month last year, reaching $4.2 billion.
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Despite tightening quarterly growth is above potential; and demand conditions still inflationary
01 September 2025
In the second quarter of 2025, GDP grew by 4.8% yoy, exceeding market expectations (4.1%) and close to our forecast (5.0%). Thus, the Turkish economy grew by 3.6% yoy in the first half of the year. In seasonally and calendar adjusted (s.a.) terms, GDP grew by 1.6% qoq.
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Partial improvement in expectations despite the current weak Outlook
25 August 2025
The recent weakness in the manufacturing industry continued in August, while domestic interest rate cuts and reduced uncertainty regarding trade policies abroad appear to have led to an improvement in domestic and foreign market order expectations.
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The budget balance trend points to a higher deficit than the MTP targets
15 August 2025
In July, the central government budget recorded a deficit of TRY23.9 billion, which was below the cash deficit (TRY68.5 billion).
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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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A commitment to rapid disinflation with new ‘intermediate targets’ in policy communication
14 August 2025
CBRT has changed the way it communicates medium-term forecasts. Accordingly, ‘interim targets’, which are used as a reference in determining the monetary policy and indicate the levels to be achieved during the disinflation process, and year-end inflation forecasts are now separate. Previously, the forecasts also served as intermediate targets and could be updated frequently.
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Temporary impact of geopolitical developments led to deterioration in current account balance
12 August 2025
In June, the current account deficit was close to our forecast at $2.0 billion. According to seasonally adjusted data, the current account balance deteriorated due to temporary factors related to geopolitical developments.
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Industrial production continues to rise on the back of defense industry
11 August 2025
In June, Industrial Production Index (IPI) increased by 0.7% month-on-month (mom) in seasonally and calendar adjusted terms and by 9.2% year-on-year.
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Contrary to expectations for a ‘hawkish cut’, the policy rate down by 300 basis points to 43.0%
24 July 2025
The CBRT cut the policy rate by 300 basis points to 43% in July. Overnight lending and borrowing rates were also reduced by the same amount, to 46.0% and 41.5% respectively, and the width of the asymmetric interest rate corridor was maintained.
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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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