CBRT increased its inflation forecasts for the 18th time: 29.5 percent by the end of 2026

The Central Bank of the Republic of Turkey (CBRT) updated its inflation forecasts for 2026, 2027 and 2028 upwards again at the fourth and last Inflation Report meeting of 2026.

According to the new forecasts announced by CBRT President Fatih Karahan, the 2026 year-end inflation expectation was increased from 28 percent to 29.5 percent, the 2027 forecast was increased from 15 percent to 21 percent, and the 2028 forecast was increased from 9 percent to 13.5 percent.

With the latest update, the number of upward revisions made by the CBRT in year-end inflation forecasts since 2021 has increased to 18.

2026 ESTIMATED INCREASED TO 29.5 PERCENT

In the CBRT's previous Inflation Report, the 2026 year-end inflation forecast was 28 percent.

In the last report of the year, this estimate was increased by 1.5 points to 29.5 percent.

The 2027 year-end inflation forecast was increased from 15 percent to 21 percent, increasing by 6 points.

The 2028 forecast was also increased from 9 percent to 13.5 percent. Thus, an upward update of 4.5 points was made in the 2028 expectation.

CBRT MADE UPWARD REVISIONS SINCE 2021

The CBRT has revised its year-end forecasts upwards a total of 18 times in the Inflation Reports it has published since 2021.

Estimates were increased in all 10 Inflation Reports published between 2021 and 2023 during Şahap Kavcıoğlu's term.

The year-end inflation forecast, which was announced as 23.2 percent at the beginning of 2022, was increased to 65.2 percent in the last report of the same year.

DURING ERKAN'S TERM, THE FORECAST WAS INCREASED FROM 22.3 PERCENT TO 58 PERCENT

During the Hafize Gaye Erkan period, the year-end inflation forecast was increased from 22.3 percent to 58 percent in July 2023.

This update was one of the most drastic forecast changes made in a single meeting.

7TH UPWARD REVISION IN THE KARAKHAN PERIOD

The number of upward revisions made during the Fatih Karahan period between 2024 and 2026 reached 7 with the last report.

CBRT's first forecast for 2026 was 9 percent.

This estimate was increased to 26 percent in May, to 28 percent at the third Inflation Report meeting on August 13, and to 29.5 percent in the last report of the year.

Thus, the inflation forecast for 2026 increased by 20.5 points above the first announced level of 9 percent.

SHARP INCREASE IN 2027 AND 2028 PREDICTIONS

In the last report, not only the 2026 forecast but also the expectations for the next two years were significantly raised.

While the CBRT previously predicted that inflation would drop to 15 percent by the end of 2027, the new forecast was announced as 21 percent.

The forecast for 2028, which was previously 9 percent, was increased to 13.5 percent.

Thus, a significant upward update was made in the medium-term path of the CBRT regarding the disinflation process.

KARAHAN: UPWARD RISKS ARE LIVE

In his presentation, Karahan claimed that recent data indicate that the improvement in the underlying trend of inflation has become evident.

Stating that they found the slowdown in services inflation items that have shown high inertia in the past important, Karahan also drew attention to the supply-side shocks caused by geopolitical developments.

Karahan said, "Supply-side shocks caused by geopolitical developments limit the decline in headline inflation. The continuation of this situation keeps the upside risks regarding the inflation outlook alive and requires a cautious stance."