Türkiye’s central bank governor Fatih Karahan delivers a speech at the Central Bank of the Republic of Türkiye headquarters in Istanbul Financial Center, Türkiye August 14, 2025. (AA Photo)
September 05, 2025 03:20 PM GMT+03:00
Türkiye’s central bank governor Fatih Karahan voiced optimism on inflation after worse-than-expected data and political turmoil rattled markets, saying investors may have been too quick to scale back forecasts for interest-rate cuts.
A court ruling against the main opposition Republican People’s Party (CHP) on Tuesday triggered a selloff in Turkish assets, followed by higher-than-expected August inflation data. Wall Street banks quickly adjusted expectations, predicting a slower pace of cuts when policymakers meet on Sept. 11.
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Karahan told Bloomberg News that August inflation and second-quarter growth showed demand-driven pressures are easing. While gross domestic product (GDP) rose 1.6% last quarter, private consumption fell for two consecutive periods. Inflation slowed to 33% from 33.5%, slightly above forecasts, but underlying indicators signaled improvement, he said.
At 10:22 a.m. Friday, the BIST-100 Index and banking stocks were slightly higher, while the lira was 0.2% lower at 41.25 against the U.S. dollar.
The bank cut rates in July to 43% from 46%, its first reduction in four months. Karahan said the bank will not allow weakening expectations to disrupt disinflation and stressed its commitment to preserving gains in reserves and the current-account balance.
September 05, 2025 03:20 PM GMT+03:00