Turkey's central bank lifts 2026 inflation forecast to 28%

Turkey's central bank has revised its inflation outlook for the end of 2026 upward to 28%, from a previous estimate of 26%, Governor Fatih Karahan announced on Thursday during the presentation of the bank's quarterly inflation report in Istanbul.

Despite the upward adjustment to the forecast, the bank left its interim inflation target for the same period unchanged at 24%. Karahan also confirmed that the interim targets for end-2027 and end-2028 remain steady at 15% and 9%, respectively.

Karahan attributed the revision to a rise in the assumption for Turkish lira-denominated import prices, driven by developments in the prices of diesel oil, natural gas, and other commodities. He reiterated the bank's commitment to maintaining the tight monetary conditions required by the projected disinflation path.

The announcement comes after the central bank held its key interest rate at 37% last month, marking the fourth consecutive meeting with no change in borrowing costs. The decision reflects the bank's cautious approach as it monitors the inflationary impact of the ongoing Iran war.

Official data showed that Turkish consumer prices rose 1.78% month-on-month in July, while the annual inflation rate eased slightly to 31.75% from the previous month.