CBRT Governor Signals Tight Stance Amid Regional Conflict
fatih karahan
At the Participation Finance Summit organized by Anadolu Agency, the Governor of the Central Bank of the Republic of Türkiye (CBRT), Fatih Karahan, delivered a critical address regarding monetary policy in Türkiye and liquidity management. Despite the mounting pressure of regional wars on the disinflation process, Karahan emphasized that the Central Bank remains steadfast in its strategic roadmap.
War and Energy Costs Impact Inflation Data
Karahan pointed out that recent geopolitical developments have pushed energy prices higher, noting that volatility in oil prices remains significantly above historical averages. This shift has increased cost pressures on energy-importing nations, with the effects of conflict clearly visible in the April inflation data.
Annual consumer inflation stood at 32.4% as of April. Karahan acknowledged that while significant progress has been made since May 2024, inflation remains high, driven largely by spikes in food and clothing prices. “We will not allow the deterioration in inflation to compromise the medium-term outlook,” Karahan stated, reinforcing the bank’s commitment to its targets despite the slowing disinflationary trend in basic goods and services.
Current Account Balance and Economic Outlook
The Governor noted that rising energy costs continue to exert pressure on the current account deficit. While risks persist, the CBRT forecasts that the current account deficit-to-national-income ratio will remain below historical averages in 2026.
Karahan highlighted that the permanent solution to Türkiye’s savings gap lies in deepening the financial system and integrating more resources into the formal economy.
Strategic Support for Participation Finance
A major highlight of the speech was the Central Bank’s focus on participation in the finance sector. Karahan identified this sector as a vital component of macroeconomic stability, noting its role in expanding the savings base.
The sector’s share in the banking industry has jumped from 4.6% to 9.5% over the last 15 years. Karahan confirmed that the CBRT is actively working to expand the range of instruments in the participation finance sector to meet rising demand, noting that as of March 2026, participation banks have continued to outperform broader sector indicators.
source: karar
