Fatih Karahan, Governor of the Central Bank of the Republic of Turkey (CBRT), announced positive developments in Turkey’s inflation landscape during his presentation, Inflation Outlook in Turkey, held in London. Karahan emphasized that inflation in Turkey continues to decline, with notable improvements in services inflation as well.
He acknowledged that backward indexation practices have contributed to persistently high levels of services inflation but highlighted a positive downward trend in rental inflation and the overall core inflation trend. Karahan also pointed out that industrial sector firms have improved their pricing behavior, signaling better control over cost pressures.
Corporate and household inflation expectations are also showing signs of improvement, Karahan noted, alongside stable imports of consumer goods (excluding jewelry). Moreover, he highlighted that the growth composition in Turkey is shifting towards net exports, while service production is maintaining a moderate pace.
In the financial sector, Karahan reported that Turkish lira deposits are increasing, and there is a continued decline in foreign exchange-protected deposit accounts, with only a small portion transitioning back to foreign currency. He also emphasized a significant enhancement in Turkey’s reserve adequacy, marking a positive step for the country’s monetary stability.
Treasury Minister Şimşek Outlines Economic Reforms
Meanwhile, Treasury and Finance Minister Mehmet Şimşek shared insights into Turkey’s broader economic outlook during the Turkey Conference organized by Bank of America in London. The event, the first since 2018, attracted over 250 investors—a record attendance.
Şimşek’s presentation detailed Turkey’s main economic policies and structural transformation goals, underscoring a comprehensive approach to combating inflation. He stated, “We will support disinflation not only with demand-side policies but also with supply-side measures in many areas such as food, housing, and energy. Reforms in these areas will be accelerated.”
The minister’s remarks underscored a dual-pronged strategy to achieve sustainable disinflation while prioritizing long-term structural reforms. The strong investor turnout at the conference reflects growing interest in Turkey’s economic trajectory and reform agenda.