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Deutsche Bank's CEEMEA Director Christian Wietoska forecasted a 25% minimum wage increase for Türkiye in 2026, while projecting the Central Bank will reduce policy rates to 30% by year-end.
Responding to Turkish media outlet Bloomberg HT's questions, Wietoska stated that Deutsche Bank expects the Central Bank of the Republic of Türkiye (CBRT) to reduce its policy rate by 30% and projects minimum wage growth of 25%.
Wietoska noted that the Central Bank's recent 150 basis point rate cut aligned with expectations.
"The Central Bank is on a correct path and can implement additional interest rate cuts within the next 12 months," Wietoska said.
Wietoska later emphasized that minimum wage increases represent significant inflation forecast uncertainty despite Deutsche Bank's base case 25% assumption.
The forecaster noted that a 30% wage increase assumption would likely result in 2026 inflation exceeding 25%.
According to Deutsche Bank's base case scenario, the bank forecasts the policy rate will decline to 30% by the end of 2026. This decline equates to a total 800 basis point easing, interpretable as eight consecutive 100 basis point rate cuts.
Wietoska stated that forward-looking Central Bank interest rate reductions within the next 12 months place monetary policy on the correct trajectory.
Focusing on the inflation outlook, Deutsche Bank expects inflation to close slightly above 30% for the remainder of this year.
"Over the next 12 months, relatively balanced and non-excessive domestic demand, coupled with declining oil prices, is expected to contribute to the disinflation process. With this process, we estimate inflation could fall to slightly below 25% by year-end next year," Wietoska stated.
Wietoska identified a key inflation uncertainty. "However, minimum wage increases create an important uncertainty and risk factor for inflation projections. Despite current assumptions of a 25% minimum wage increase, the probability of a higher increase remains strong."
Wietoska added that "with an assumption of a 30% increase, it is likely that 2026 could close with inflation above 25%."
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The Minimum Wage Determination Commission will hold its second meeting on Thursday (Dec. 18) to discuss fundamental economic data.
The Commission, which held its first meeting on December 12, will convene at 14:00 local time to address economic indicators. Representatives from the Treasury and Finance Ministry, Trade Ministry, and Turkish Statistical Institute will share data and reports with the Commission, chaired by Labor General Director Oguz Tuncay.
Labor and Social Security Minister Vedat Isikhan answered journalists' questions regarding whether a wage figure would be discussed in the second meeting.
"It is too early for figures because we need to receive the parties' views and evaluate them in the Commission," Isikhan said.
Isikhan addressed the Turk-Is labor union's absence from meetings. "We will proceed with all social dialogue processes as required. I will consult with unions and receive their views. It is my duty to ensure consultations take place," Isikhan added.
According to the law, the Minimum Wage Determination Commission makes decisions by majority vote. Despite Turk-Is' absence, government and employer representatives from the Turkish Confederation of Employer Associations have sufficient votes to determine the 2026 minimum wage.
The 2026 minimum wage must be determined by month-end.
Set as preferred source
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