TCMB Raises Inflation Target to 28%: A Pivotal Moment for Turkey's Economy

The Central Bank of the Republic of Turkey (CBRT) raised its 2026 year‑end inflation target to 28%, signaling a renewed tightening of monetary policy.

A New Turning Point in Inflation Targeting

CBRT Governor Fatih Karahan kept the 2026 mid‑year target at 24% and the 2027 mid‑year target at 15%. The food‑price inflation outlook was lifted to 28.5%.

■28%: 2026 year‑end inflation forecast

■24%: 2026 mid‑year target

■15%: 2027 mid‑year target

■28.5%: 2026 food‑price inflation forecast

Tax Heavyweights and Corporate Tax Burden

The 2025 tax year saw Baykar executives and Koç Holding topping the personal income‑tax list. In the corporate tax arena, Ziraat Bank recorded the highest assessment at TL 70,394,682,000.

■Top personal taxpayers: Selçuk Bayraktar, Haluk Bayraktar, Rahmi Koç

■Highest corporate tax: Ziraat Bank – TL 70,394,682,000

Temporary OTV Relief for Motor Vehicles

Until the end of August, the special consumption tax (OTV) on motor vehicles will be set to 0 TL, with a phased increase scheduled from September. The new rule excludes the Eşel Mobile System from motor‑vehicle OTV calculations.

■0 TL: OTV until end‑August

■7.74 TL/liter: Current effective OTV rate

Customs Union and EU Dialogue: Strategic Outlook

President Erdoğan highlighted a $5 billion trade goal with Austria and stressed that updating the Customs Union will benefit both sides. Austrian Chancellor Stocker underscored Turkey’s pivotal role for the EU on security and migration.

■$5 billion: Austria‑Turkey trade target

MSCI Turkey Index Revision: Market Signals

MSCI announced changes to the Turkey index effective after the 31 August close, adding and dropping constituents. These adjustments can directly influence foreign‑investor flows.

US Inflation Data and the Fed’s Policy Focus

July’s core US inflation slowed to its lowest pace since March 2021, easing pressure on the Federal Reserve to raise rates further and potentially softening global liquidity conditions.

■Lowest pace: Since March 2021

Markets are likely to adopt a more cautious credit stance in Turkey, given the risk of inflation staying above target. While the temporary OTV waiver may boost short‑term consumer demand, it could also exacerbate inflationary pressures over the longer run. The MSCI revisions will reshape foreign investor appetite for Turkish equities, and the CBRT’s tighter policy may strain real‑sector growth expectations. In this environment, consumer‑friendly measures on credit‑card limits and file fees become essential to protect borrowers.