The Central Bank of the Republic of Turkey (CBRT) has released its latest Market Participants Survey, indicating a slight improvement in inflation expectations. Participants now forecast an annual inflation rate of 29.66% by the end of 2025, down from 29.86% in the previous survey. This adjustment reflects a cautious optimism among market participants regarding the country's economic trajectory.
In June 2025, Turkey's annual inflation rate eased to 35.05%, a notable decline from the peak of 75% in May 2024. This downward trend is attributed to the CBRT's tight monetary policies, which have been instrumental in curbing inflationary pressures. The central bank's proactive measures, including interest rate adjustments, have played a pivotal role in stabilizing the economy.
On July 24, 2025, the CBRT resumed its monetary easing cycle by cutting the benchmark interest rate by 300 basis points to 43%. This decision marks a significant shift from the previous tightening stance and is seen as a response to the improving inflation outlook and stabilizing financial markets. The rate cut aims to support economic growth while maintaining the disinflationary path.
Despite these positive developments, challenges persist. The Turkish lira remains under pressure, with the year-end USD/TRY exchange rate projected to reach 43.72, indicating continued depreciation concerns. Additionally, the current account deficit is expected to widen, reflecting ongoing structural imbalances in the economy.
Looking ahead, the CBRT's policy decisions will be crucial in navigating these challenges. The central bank has emphasized its commitment to maintaining a tight monetary stance until price stability is achieved, signaling a cautious approach to future rate cuts. Market participants will closely monitor these developments to gauge the effectiveness of the CBRT's strategies in fostering sustainable economic growth.