Turkey's Central Bank Keeps Tight Policy as Deutsche Bank Predicts Inflation Rise

Deutsche Bank’s 2026‑2027 CEEMEA outlook projects that the Central Bank of the Republic of Turkey will maintain a tight monetary stance, cutting its policy rate from the current 37% to 36% by the end of the third quarter, to 35% by year‑end and to 31% by the end of 2027. The bank forecasts the dollar/TRY exchange rate to reach 51 by the end of 2024 and 65 by 2027, while expecting inflation to average 30.5% in 2026 and real GDP growth of about 3%.

The Turkish Central Bank’s June price‑development report shows a modest slowdown in headline inflation, driven by a 0.91% decline in energy prices. Year‑on‑year consumer inflation fell to 39.41% in June, with the energy group dropping 4.0% and fuel prices falling 4%. Core inflation slipped 0.58 percentage points to 39.64%, while food, services and other groups showed mixed movements. The report notes that the observed slowdown is limited and that three‑month averages still indicate modest inflation pressure.

Both documents highlight ongoing concerns about the Turkish lira’s appreciation, the impact of high real rates on foreign investment, and the potential influence of fiscal policy and upcoming social‑security reforms on price dynamics.