Turkey's Main Financial Regulator Lowers Its Inflation Forecast and Prepares to End Deposits Protected in Foreign Currency.
Central Bank of Turkey Governor Fatih Karahan presented the third inflation report in 2025, announcing updated forecasts for price dynamics and key steps in the country's monetary policy. According to the new data, The Central Bank expects inflation to be 25-29% by the end of this year and 13-19% by the end of 2026, which is a decrease compared to previous estimates.
Karahan noted that inflationary pressures are gradually weakening: in July, consumer price growth slowed to 33.5%. However, the regulator intends to maintain a tight monetary policy until sustainable price stability is achieved.
One of the key elements of the strategy is the introduction of a new forecast structure with “intermediate targets“ for inflation, which will be used as an anchor for forming expectations and assessing the effectiveness of the measures taken.
The Central Bank also confirmed its plans to complete the program for deposits protected in foreign currency by the end of 2025. According to the agency's experts, this will help strengthen the transmission mechanism of monetary policy and increase the share of deposits in Turkish liras, which is important for long-term financial stability.
Among other measures aimed at limiting inflation and strengthening the money market is active liquidity management through deposit instruments, swaps and regulation of credit activity. Experts believe that these measures are already showing an effect: the net international reserves of the Central Bank of the Republic of Turkey (excluding currency swaps) reached USD 50 billion, and gross reserves - USD 174 billion.
At the same time, Karahan stressed that geopolitical and climatic risks, including the ongoing drought, remain a serious threat to food inflation, which requires close monitoring and flexibility in response.