Newsletters
The Central Bank of the Republic of Türkiye (CBRT) is highly likely to pause its rate-cut cycle that has been in place since July 2025 after January’s higher-than-expected inflation data, local lender Is Bank's CEO Hakan Aran stated.
Türkiye’s inflation accelerated in January, driven by food price spikes and new year adjustments, with monthly inflation at 4.84% and annual inflation reaching 30.65%. Aran described the figures as "discouraging" and said a decision to keep rates unchanged would signal policy determination.
The Turkish central bank has reduced its policy rate to 37% from 46% since July, and the next Monetary Policy Committee (MPC) meeting is scheduled for Mar. 12, 2026.
After the January data, the central bank’s earlier 2026 year-end inflation projection range of 13% to 19% is no longer valid, Aran told CNBC-e, adding that 19% should serve as the new lower bound in the next revision.
He said a 19% to 25% range now appears more reasonable, but noted that the CBRT may wait for the next two inflation readings before updating its formal projections in its first inflation report, scheduled for release on Feb. 12.
Aran also said that the bank expects inflation at the end of the year to fall between 23% and 25%, with the policy rate ending the year in a 28% to 30% corridor.
On sector performance, Aran said banks’ return on equity may exceed the inflation rate this year and described 2026 as a period when expectations for the banking industry improve. He added that the country risk premium (CDS), a market measure of sovereign default risk, has fallen to around the 200 level, reducing perceived risk for banks.
Looking ahead, Aran said, "2027 will be a year when everyone can breathe." He added that economic policy may evolve toward a more inclusive development model and described that year as a starting point for renewed positioning in the global economy.
Set as preferred source
Set as preferred source
1 min read
1 min read
