Turkey's Central Bank warns of geopolitical risks amid tight monetary policy

Central Bank Governor Fatih Karahan, speaking at the Turkish Banks Association’s 69th General Assembly, said banks are the key driver of disinflation and noted that energy price pressure is feeding inflation. He affirmed the central bank’s “tight stance” and outlined macro‑prudential steps taken since the second half of 2025 to curb credit growth, revise deposit‑share rules and support price stability despite heightened geopolitical risk.

At the same time, markets were unsettled by escalating Middle‑East tensions, including U.S. strikes in Iran and threats to the Strait of Hormuz, which pushed risk premiums higher. Investors watched the ECB’s upcoming rate decision and the Fed’s possible tightening after U.S. inflation data showed a rise to 4.2%. The S&P 500, Nasdaq and Dow fell, gold hit a seven‑month low, while oil prices fluctuated around $93 a barrel.