Deutsche Bank has raised its year-end forecasts for Turkey’s inflation to 30 percent from 28.5 percent and policy rate to 36 percent from 35 percent, citing geopolitical risks and energy costs.
The revisions appeared in an analysis signed by Deutsche Bank economist Yiğit Onay following Thursday’s decision, the Turkish Ekonomim business daily reported on Saturday.
The bank calculated that a rise of more than 35 percent in Brent crude, combined with changes to fuel taxes, would add about 1.5 percent to Turkey’s inflation path. European natural gas prices had increased by more than 50 percent, while prices for agricultural commodities had also increased.
Deutsche Bank expects the Turkish Central Bank to delay reducing its effective funding cost from the upper corridor rate of 40 percent to the 37 percent policy rate until September. Policy rate cuts may not begin before the fourth quarter.
The bank kept all three rates unchanged on Thursday, pointing to renewed increases in energy prices amid geopolitical uncertainty.
Annual consumer inflation slowed to 32.11 percent in June. The central bank expects inflation to end 2026 at 26 percent and maintains an interim target of 24 percent, both below Deutsche Bank’s revised estimate.