Istanbul: Turkish central bankers have signaled a potential slowdown in the pace of interest rate cuts, as concerns over persistent inflation gain prominence. According to foreign investors who attended meetings on the sidelines of the IMF and World Bank annual gatherings in Washington, Central Bank Governor Fatih Karahan and his deputies emphasized caution, noting the need to monitor market expectations closely before the upcoming policy decision.
The meetings came after aggressive rate reductions in July and September, totaling 550 basis points. While no specific guidance was provided for the next move, the bankers acknowledged the challenges posed by “sticky” inflation, which has recently shown signs of slowing disinflation. Turkey’s inflation rate rose to 33.3% in September, exceeding expectations and marking the first annual increase since May 2024’s peak of 75.4%.
Economists remain divided over the central bank’s next step. A Reuters poll indicated median expectations of a 100-basis-point cut, but predictions ranged widely from no change to a 250-basis-point reduction reflecting uncertainty over how policymakers will respond to persistent high prices. Investors noted that the previous rate cuts were more aggressive than anticipated, raising the possibility of a course correction.
Adding to market speculation is the upcoming retirement of Deputy Governor Cevdet Akcay, a key hawkish voice on the policy committee, in April 2026. His replacement has yet to be named, fueling additional uncertainty regarding future monetary strategy.
Since mid-2023, the central bank has gradually moved away from unorthodox low-rate policies that previously drove inflation and currency depreciation. The cautious approach observed in Washington reflects the institution’s attempt to balance price stability with economic growth, signaling that monetary policy in Turkey may adopt a more measured pace in the coming months.