Get the news from the Center in 10 items

The Central Bank of the Republic of Turkey ( CBRT ) announced its fourth and final Inflation Report for 2025. The 16% consumer price inflation target for 2026 remained unchanged. Even if we assume for a moment that it wasn't feeling the shadow of politics, the CBRT faced a serious dilemma. If it changed the target, it would be throwing in the towel, as it has in previous years, admitting to the possibility of multiple revisions throughout the year, and its messages would lose credibility. If it kept the target unchanged, achieving this target would be deemed impossible in an environment where the disinflation program admitted to a slowdown (in other words, admitting that things weren't going well), and no one would take its 2026 plans seriously. It's worth remembering that the 2024 Medium-Term Program started with a 17.5% forecast, and today, it's been declared that 2025 will end with an inflation rate of 31-33%.

As is known, the Central Bank of the Republic of Turkey (CBRT) chose the second path. Thus, the minimum wage, pensions, and public employee salaries would be determined based on a 16 percent rate, marking another nightmare year for those who earn their living. The CBRT's most recent Sectoral Inflation Expectations Report states that the real sector's 12-month inflation expectation is 36.30 percent. This means companies will set prices based on this rate. Therefore, the 16 percent target will be a pipe dream. For households, the inflation expectation is 54.39 percent. Ordinary citizens will not be intimidated by the 61.9 percent interest rates on consumer loans or the 4.50 percent monthly credit card interest rate; they will continue to borrow to survive. Or they will not give up buying a product whose price has increased by 35-40 percent. Under these circumstances, where no economic actor is convinced of the 16 percent target, the inflation target will naturally be astray again. Imagine for a moment that the 16 percent rate will be achieved; It would become impossible for companies benefiting from 48% commercial loan interest rates and individuals borrowing under the harsh conditions mentioned above to repay their debts, and bankruptcies would become rampant.

Digging into the 61-page Inflation Report, you encounter serious admissions and contradictions. Let's focus on the salient points in the 10 points, one by one, using the phrase "Get the news from the Central Bank."

1 ) "However, under an outlook where the projected path for monetary policy is higher than in the previous Report period, the effect of the monetary policy stance on demand conditions becomes more evident and inflation expectations improve, affecting the year-end inflation forecast downward (Page 2)."

Meaning : We have no choice but to keep interest rates high. I will not resort to interest rate cuts as long as the Palace allows; I will try to curb demand this way.

2 ) "Turkey's foreign demand is expected to remain weaker in 2026, closer to its historical average compared to 2025, due to the partially improving outlook in the Middle East and Africa Region (Page 5)."

Meaning : Give up on rhetoric like "new records in exports, increasing our competitiveness in foreign trade"; unfortunately, things will not go well in the global climate created by "my friend Trump".

3 ) "While the global disinflation process varies across countries, it is generally slowing down, while tariff measures are keeping inflationary risks alive. Headline inflation, which is above target at 2.2 percent in the Eurozone and 3 percent in the US, has also remained above the 2 percent target in many developed countries (Page 6)."

Meaning : Statements like "the disinflation process is continuing successfully" are ridiculous in a world where people are worried about inflation just over 2 percent.

4 ) "GDBS yields, which had declined across all maturities until September, increased across all maturities, more significantly in longer-term bonds, following the September inflation data that exceeded market expectations, in addition to the deterioration in domestic risk perception (Page 9)."

Meaning : No matter how much we cut policy rates, this doesn't resonate in the bond markets. As long as government bond yields remain high, the budget interest bill continues to rise.

5 ) "The annualized growth rate of personal credit cards is 45.3 percent, while that of consumer loans is 52.7 percent (Page 11)."

Meaning : People are being dragged into debt to survive, with interest rates far above inflation and credit growth rates also far above inflation.

6 ) "The quarterly contraction in private consumption observed in the first quarter continued into the second quarter. Total investments, after declining in the first quarter, increased due to investments in construction and machinery and equipment. Although growth in the second quarter exceeded expectations, domestic demand is considered to have remained weak (Page 13)."

Meaning : Growth continues to be driven by construction. Domestic demand continues to weaken. Given that inflation hasn't been brought down, the danger of stagflation—inflation within a recession—is looming.

7 ) "In the first nine months of 2025, revenues increased by 48 percent and expenditures by 42.8 percent compared to the same period of the previous year. Income tax, the item that has made the highest contribution to the increase in tax revenues recently, recorded a high annual increase of 91.6 percent in the first nine months of the year. The contribution of the corporate tax, whose realization/budget target ratio was 52.5 percent, to the 2025 budget remained well below the projections (Page 21)."

Meaning : The tax burden was largely borne by employees, who were described as “payroll prisoners,” through the income tax channel, while the contribution of renowned institutions to the tax pool remained limited through various tricks.

8 ) "It is important to ensure that fiscal adjustment is achieved through reductions in non-interest expenditures rather than tax increases, in terms of the coordination of monetary and fiscal policies within the scope of the fight against inflation (Page 23)."

Meaning : Even if there is a government that opposes interest, interest expenditures will continue to rise. Budget discipline will be achieved not through tax increases, but through spending cuts. Therefore, a real decline in social spending such as education, healthcare, and care, as well as in public employee and pension payments, should be expected.

9 ) "Despite this moderate course of global supply-side factors, domestic crop production estimates for 2025 were revised downwards due to supply-side factors such as drought and frost, indicating a clearly negative course in the supply of agricultural and food products (Page 25)."

Meaning : There is no significant supply problem for agricultural production globally. The problem stems from the deteriorating structure of our agriculture. The primary cause of food inflation is inadequate supply, that is, inadequate production.

10 ) "The impact of returning to school was evident on service inflation in September. While educational services increased significantly due to university tuition, school bus fees increased transportation services, and school dormitory fees increased accommodation prices in the restaurant-hotel group. Increases in daycare fees were reflected in the other services item (Page 26)."

Meaning: Every season, every month, we find a justification for rising inflation. We're quite adept at finding excuses for every inflation increase by claiming it's the time when schools open, rents adjust, revaluations take effect, wages rise, and clothing is subject to seasonal influences.