Central Bank: “Tight Stance Continues, Year-end Inflation Forecast remains at 24 percent”

Central Bank Governor Fatih Karahan presented the second Inflation Report of 2025. One of the key takeaways from the presentation was that the year-end inflation forecast for 2025 remains unchanged at 24%. This forecast had previously been revised up from 21% in the first report of the year, and now there has been no further upward revision. The forecast for 2026 remains at 12%, and for the first time, the Central Bank announced a target of 8% for 2027.

In his speech, Karahan emphasized that the Central Bank was not operating on “autopilot,” but was instead moving forward based on data. He stressed the importance of caution and reaffirmed the Bank’s commitment to maintaining a tight monetary policy stance.

The economic outlook is mixed, but the overall message is clear: inflation has started to decline, and the Central Bank is ready to take all necessary steps to ensure that this disinflation process continues. Data from May shows a decrease in inflation compared to April. There is some easing in services inflation, though categories like rent and education continue to exert upward pressure.

Karahan also noted that domestic demand was strong in the first quarter but has begun to slow in the second quarter. Consumption is losing momentum, credit growth is limited, and the shift toward foreign currencies remains minimal.

In summary, the Central Bank is maintaining its tight monetary stance and signaling a firm commitment to fighting inflation. The underlying message of the announcement was: “As long as the data continues to improve, reaching our targets is possible—but caution remains essential.”