ING forecasts slower disinflation and higher borrowing pressure for Türkiye

ING has revised its outlook for the Turkish economy, projecting a gradual easing in monetary policy by the Central Bank of the Republic of Türkiye (TCMB) through 2026, while warning that inflation risks remain tilted to the upside and public borrowing could again exceed official targets.

In its latest report, ING said it expects the Central Bank of the Republic of Türkiye (TCMB) to cut its policy rate to 28% by the end of 2026. However, the bank stressed that risks to this forecast remain on the upside, reflecting persistent inflation pressures and fragile inflation expectations.

Monetary policy outlook

According to ING Global’s analysis, the TCMB is likely to maintain a cautious easing cycle, balancing disinflation efforts against the need to support economic activity. While headline inflation is expected to continue moderating, ING warned that upside risks — including wage dynamics, fiscal pressures, and exchange-rate pass-through — could slow the pace of monetary loosening.

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Public borrowing seen exceeding targets

ING also flagged growing risks on the fiscal front, predicting that Türkiye’s Treasury could exceed its domestic borrowing targets this year, as it did in the previous year. The bank pointed to elevated financing needs and continued reliance on domestic debt issuance as key challenges for fiscal management.

Macro forecasts for 2026

Under its baseline scenario, ING forecasts consumer price inflation (CPI) at 23% by end-2026, while economic growth is expected to reach 4.5% over the same period.

For government bonds, ING projects the 10-year benchmark yield at 26.30% by the end of the second quarter, easing to 23.32% by year-end, assuming continued progress on inflation and monetary tightening credibility.

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Exchange rate projections

ING’s report also included updated foreign exchange forecasts, pointing to further depreciation pressures on the Turkish lira.

• USD/TRY is expected to rise to 46.79 by the end of the second quarter, reaching 51.0 by end-2026

• EUR/TRY is forecast at 56.15 by the end of the second quarter, increasing to 62.22 by year-end

The bank said exchange rate dynamics would remain closely tied to inflation trends, external financing conditions, and investor confidence in Türkiye’s macroeconomic policy framework.

Outlook

ING concluded that while Türkiye’s macroeconomic rebalancing remains intact, the path ahead is vulnerable to inflation shocks and fiscal slippage, suggesting that policymakers may face limited room for error as they navigate disinflation and growth objectives into 2026.

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