Turkey’s consumer price index (CPI) inflation officially moved down from 31.07% y/y in November to 30.89% in December, the Turkish Statistical Institute (TUIK, or TurkStat) said on January 5.

On December 5, Turkey’s finance minister Mehmet Simsek said that the country looked set to release end-2025 inflation at around 31% y/y.

Official inflation stood at 44% y/y at end-2024. It hovered around 33% between July and October.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

At 31%, Turkey placed in front of Haiti in the world inflation league to stand at fifth place.

Month on month below 1% again

TUIK also posted a monthly official inflation figure of 0.89% for December after releasing 0.87% for November, 2.55% for October, 3.23% for September, 2.04% for August, 2.06% for July, 1.37% for June, 1.53% for May and 3.00% for April.

January revision to solve "above-30%" deadlock

With the January 2026 data, the TUIK will change the base year in its official CPI series to 2025 from 2003. It will also employ wide-scope changes in its methodology and inflation basket.

The revision, which is entirely in line with Eurostat guidance, will most probably solve the "above-30%" deadlock.

Above 20% at end-2026

On February 12, the central bank will release its next quarterly inflation report, the first such report of 2026. It will include updated forecasts.

For end-2026, the authority’s “forecast range” remains unchanged at 13-19%, with the “interim target” standing at 16%.

In the February report, an upgrade is not expected for the end-2026 numbers, while it is almost certain that they will move up across the year.

As things stand, the realisation is supposed to come in at above the 20%-level.

January 22, first rate cut of 2026

On December 11, the monetary policy committee (MPC) of Turkey’s central bank cut its main policy rate (one-week repo) by 150 bp to 38% in what was its final rate-setting meeting of 2025.

On January 22, the MPC will hold its first rate-setting meeting of 2026. Another rate cut is a near certainty. Uncertainty, however, abounds as to the likely size of the cut.

As things stand, another 150-200bp cut is on the cards.

The central bank will again hold eight rate-setting meetings in 2026. A 100-150bp rate cut on average per meeting and a combined cut of 1,000bp, which would bring the policy rate to 28% at end-2026, can be expected.

Bed of roses

The USD/TRY pair remains under control. Turkish borrowers’ eurobond auctions have remained strong. Turkey’s five-year credit default swaps (CDS) are testing the 200-level. On the loans side, high debt rollover rates and low costs are observed.

After a local court dropped the case targeting the headquarters of the main opposition Republican People’s Party (CHP) in October, political stress that was bugging the finance industry dissolved.