Turkey’s consumer price index (CPI) inflation officially stood at 35.05% year on year in June versus 35.41% y/y in May and 44% y/y at end-2024, the Turkish Statistical Institute (TUIK, or TurkStat) said on July 3.

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 35%, Turkey remains at eighth place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated an inflation figure of 69% for June, following its assessment of 71% for May.

Downward surprises continue in monthly figures

TUIK also posted a monthly official inflation figure of 1.37% for June after releasing a 1.53% for May and a 3.00% for April.

In the coming months, TUIK is set to deliver further outcomes in the 1-2%s for the official monthly headline indicator.

Below 30% at end-2025

On May 22, the central bank left its end-2025 official inflation 'target' unchanged at 24% y/y in its latest quarterly inflation report.

The upper boundary of the forecast range was also kept unchanged by the authority at 29%.

The authority expected seasonally-adjusted monthly inflation figures to edge up a little in 1Q25 (due to wage hikes and new year price/fee updates) in comparison to the 2%s in 4Q24.

The expectation is, meanwhile, that the figures will fall below the 1.5%-level starting from 3Q25.

Central bank governor Fatih Karahan reiterated on May 22 that the seasonally-adjusted monthly figure will end the year at a little bit above the 1%-level.

On August 14, the central bank will release its next inflation report and updated forecasts.

Rate cut on July 24

On June 25, Isbank (ISCTR) CEO Hakan Aran said that he expected Turkey’s central bank to cut its policy rate by 350 bp at the next monetary policy committee (MPC) meeting, scheduled for July 24.

Official inflation, which stands at 35%, provides the authority with a wide margin, he also said.

As a result, a 350bp cut would not hurt the central bank’s tight stance in its monetary policy, according to the CEO.

Isbank is among largest private lenders in Turkey.

On June 28, Alpaslan Cakar, general manager of government-run Ziraat Bank, said that he expected a significant rate cut on July 24.

Ziraat is the largest bank in Turkey.

Stayed put on June 19

On June 19, the MPC left its main policy rate (one-week repo) and overnight lending rate unchanged at 46% and 49%, respectively. It referred to the Israel-Iran war that was ongoing at the time.

Ahead of the decision on the rates, the authority was expected to cut its overnight rate by 150bp to fix the symmetry of its so-called interest rate corridor given that its overnight borrowing rate stands at 44.5%.

The central bank occasionally scraps or limits one-week repo auctions to push local lenders to the overnight window for the sake of additional tightening within the interest rate corridor.

Since June 13, the authority’s weighted average cost of funding has fallen to 46%. It remained at 49% between May 26 and June 5. In parallel, market rates (TLREF) also fell into the 45%s on July 1.

Markets calm

With the ceasefire in the Israel-Iran War, markets have entered into a calm period. The USD/TRY remains in the 39s. Reserves and portfolio flows are flat. Debt inflows are, meanwhile, getting stronger lately.