Prominent Economist Mahfi Eğilmez Warns CBRT to Revise Inflation Forecast Range

Eğilmez Urges Central Bank to Adopt a ‘Realistic Approach’ Ahead of Friday’s Report; Recommends Holding Rates Steady in December

ISTANBUL – Leading Turkish economist Mahfi Eğilmez has issued a strong recommendation to the Central Bank of the Republic of Turkey (CBRT) to revise its year-end inflation forecast range, arguing that the current trajectory is proving unrealistic.

Speaking on CNBC-e ahead of the CBRT’s final Inflation Report release on Friday, November 7, Eğilmez offered critical assessments of the current economic environment, including October’s inflation figures and market expectations for the crucial December interest rate decision.

🎯 CBRT Must Change Its Target Range

Eğilmez emphasized that the Central Bank would benefit from adopting a “realistic approach” by adjusting its official year-end inflation target range. The economist noted that the CBRT itself has acknowledged that inflation is not proceeding as previously forecast.

“The Central Bank needs to change its inflation forecast range,” Eğilmez stated. “It would be beneficial for the Central Bank to change its year-end inflation forecast range with a realistic approach.”

The CBRT’s third Inflation Report had previously projected 2025 year-end inflation to be in the range of 25% to 29%, with the 2026 forecast set between 13% and 19%.

🚫 “I Would Not Change the Rate in December”

Evaluating the recent October inflation data, Eğilmez observed that while there may be small dips in price increases, inflation expectations have yet to be broken.

Eğilmez shared his own year-end forecast, stating that he does not expect inflation to drop below 30%. “If we can finish the year at 31%, that looks good. It looks like it will finish around 32%,” he commented.

Regarding the CBRT’s highly anticipated December Monetary Policy Committee (MPC) meeting, Eğilmez advised caution against further easing:

“If I were the Central Bank, I would not change the interest rate in December.”

⚖️ The Trade-off: Current Account vs. Growth

Eğilmez also touched upon Turkey’s external balance, noting that the country’s foreign trade performance is currently favorable.

“We are not doing badly in foreign trade. Our current account deficit is doing well, it is under control. Our current balance is better compared to previous years,” he explained.

However, the economist quickly linked this positive current account trend directly to the slowdown in economic growth: “The positive side is the drop in the current account deficit, which means fewer foreign exchange problems. The negative side is that the drop in growth is affecting this,” he assessed. Eğilmez added that despite slower growth, import levels remain too high and should be falling more rapidly.

🇺🇸 Global Warning: Fed May Halt Rate Cuts

Looking internationally, Mahfi Eğilmez offered a warning regarding the expectations for the U.S. Federal Reserve’s December meeting: “The Fed might abandon interest rate cuts.”

Eğilmez highlighted the recent positive figures in private-sector non-farm employment. Since the Fed considers both inflation and employment data, continued strong job market performance could prompt the central bank to pause its easing cycle, removing the need to “cut rates to boost employment.” Given that the Fed’s inflation target remains significantly above its goal, Eğilmez concluded that it is too early to predict a definitive rate cut.