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Annual inflation in Türkiye is expected to fall to approximately 22% by the end of 2026, while the policy rate set by the Central Bank of the Republic of Türkiye (CBRT) is projected to decline to 27%, Netherlands-based lender ING’s Türkiye CEO Alper Gokgoz stated.
The U.S. dollar/Turkish lira exchange rate (USD/TRY), which currently hovers around 42.93, is projected to reach approximately 51 by the end of 2026, implying a gain of about 18.8%, Gokgoz added.
According to the ING Türkiye CEO, the outlook hinges on sustained disinflation, stable investor appetite, and the central bank’s commitment to tight monetary policy. Gokgoz noted that the scale of further interest rate cuts will depend not only on the inflation outlook but also on dollarization trends, reserve adequacy, growth expectations, and labor market conditions.
Since July 2025, the Central Bank of the Republic of Türkiye (CBRT) has implemented a total of 800 basis points in interest rate cuts, reducing the benchmark policy rate from 46% to 38%. The easing cycle comes amid a steady deceleration in consumer prices, with annual inflation easing to 31.07% in November and monthly inflation slowing to 0.87%, the lowest monthly reading since May 2023.
Gokgoz stressed that the Turkish lira began to regain stability after the CBRT took swift and comprehensive steps in response to heightened financial volatility earlier in the year. He noted that the return of policy predictability and tighter macroprudential controls helped rebuild investor confidence.
"Since May, foreign reserves have entered a strong upward trend and reached record levels in recent months," Gokgoz said. He attributed this to a combination of renewed foreign portfolio inflows, rising domestic demand for lira-denominated assets, and higher global gold prices, which have boosted total reserves above $190 billion.
Gokgoz also observed that non-resident investor appetite for Turkish assets is recovering, supported by improved macroeconomic signals and a clearer policy framework. Meanwhile, local investors have increasingly shifted toward lira instruments, further underpinning currency stability.
These developments, he emphasized, have created a more resilient foundation for the country’s balance of payments, offering the central bank greater flexibility as it navigates the disinflation process and manages expectations in the months ahead.
Looking at the banking industry’s financial outlook, Gokgoz projected a stronger performance in 2026 compared to 2025, driven by wider net interest margins and resilient capital levels.
He highlighted that the first nine months of 2025 saw sector-wide net profits rise 45% from the previous year. "Lower interest rates compared to 2024 improved net interest margins, while rising fee and commission income also supported profitability," Gokgoz said. Though there was an increase in loan loss provisions, their impact was mitigated by strong capital buffers and high coverage ratios, he asserted.
Official data showed that the sector’s net profits reached ₺842.84 billion ($19.92 billion) in November 2025, marking a 17.3% increase compared to the same month in the previous year. Total assets of the sector amounted to ₺44.97 trillion ($1.06 trillion), with loans making up ₺22.17 trillion ($524.2 billion) and deposits totaling ₺26.06 trillion ($616.5 billion).
The regulatory capital-to-risk-weighted-assets ratio, a widely used measure of financial strength, rose to 19.2% by the end of November. Meanwhile, the share of non-performing loans in total cash loans stood at 2.43%, indicating relatively sound asset quality.
ING Türkiye, one of the country’s leading foreign banks, held €4.86 billion ($5.72 billion) in assets as of Q3 2025, with 55 branches and 1,675 employees.
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