The President of the Central Bank of the Republic of Turkey (CBRT), Fatih Karahan, faced the cameras to announce the end-of-year inflation report. Karahan revealed that CBRT raised the 2024 end-of-year inflation forecast from 38% to 44%. The 2025 forecast was also increased to 21%.

The closely watched inflation report was disclosed.

The Central Bank of the Republic of Turkey (CBRT) raised its inflation forecasts.

The end-of-year inflation forecast was raised by 6 points to 44%. The 2025 forecast increased from 14% to 21%; the 2026 forecast from 9% to 12%. The key points from the presentation of CBRT President Fatih Karahan on the inflation report were as follows:

“Our disinflation process continues. We evaluate that the slowdown in domestic demand continues, reaching supportive levels in the inflation decline. With this deceleration, the current account deficit continues to decrease. The main trend of inflation is slower than anticipated. We will continue our tight stance in monetary policy to ensure the continuation of disinflation. The global demand outlook continues to determine commodity prices. Advanced country central banks have started interest rate cut processes. Data for the third quarter showed that domestic demand continued on a moderate trend. Supply indicators in the third quarter remained in line with domestic demand.

Output gap reduced in the third quarter. We evaluate that the reduction in the output gap in the third quarter will continue in the final quarter of the year.

The slowing demand conditions weaken the overall spread of price increases. The output gap will be an important component of disinflation. POSITIVE TREND IN CURRENT ACCOUNT BALANCE WILL CONTINUE We anticipate a decrease in the cumulative current account deficit in the third quarter. We foresee that the positive trend in the current account balance will continue. We closely monitor the main trend of inflation. We see that the decline in the main trend of inflation continued in October. While the trend of inflation is slower than expected, it is improving. In the third quarter, the return to school impacted service inflation. With the completion of the return to school, relative price adjustments are largely complete. MONTHLY RENT INFLATION TO SLOW DOWN It is healthy to look at service inflation as rent and rent-excluded. We consider that inertia in rent inflation is higher than our predictions. Price increases in non-rent services gradually lose momentum. Leading indicators for rent suggest that monthly rent inflation will slow down in the final quarter. We see a clear improvement in pricing behavior among firms in the industrial sector. Generally, basic goods inflation continues to remain low. INFLATION FORECAST RAISED BY 6 POINTS We updated the 2024 and 2025 inflation forecasts to 44% (previously 38%) and 21% (previously 14%) respectively. We expect it to decline to 12% (previously 9%) by the end of 2026. We predict that inflation will stabilize close to the 5% target in the medium term. We anticipate a steady decline in annual inflation in the coming period with the maintenance of a cautious stance in monetary policy. It is not accurate to perceive the high revision as a change in monetary policy. CENTRAL BANK STATEMENT ON MINIMUM WAGE The Central Bank does not make any official or unofficial proposals regarding the minimum wage. There is no evaluation as claimed. We are not decision-makers.” Karahan also used the phrase “We are data-oriented, it is difficult to say when the first interest rate cut will happen.” regarding the timing of the first interest rate cut.