BBVA Türkiye analysis: The CBRT sticks to   its interim inflation targets

In the first inflation report of the year, the Central Bank (CBRT) maintained its interim inflation targets (36% by end 2024 and 14% by end 2025). We expect the policy rate at 45% throughout the year although the possibility of a rate hike above 45% remains.

The CBRT assessed the existing monetary tightening level was adequate to establish the targeted disinflation path.

Even though the recent minimum wage hike was above their previous assumption, the expected improvement in the underlying inflation trend was the main reason not to revise the current targets.

We eliminate our previous downward bias and evaluate that risks are now balanced on our year-end inflation forecast of 45% in a range of 38-52% with 70% confidence band on the back of strong inertia especially in services prices, high inflation expectations and still ongoing positive output gap.

If the monthly inflation trend proves to be stickier, especially in February and March, we evaluate credit policies and additional quantitative tightening measures will be primarily preferred.

We think that the signaling impact will remain key and a clearer commitment (an explicit rate hike signal rather than the reassessment on the monetary stance) will enhance the monetary transmission mechanism.


Follow our  English language YouTube videos  @ REAL TURKEY:

And content at Twitter: @AtillaEng

Facebook:  Real Turkey Channel:


Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.