TCMB Raises 2026 Inflation Forecast to 28%: Implications for Markets and BIST 100

TCMB lifted its 2026 inflation forecast from 26% to 28%, signaling a continuation of monetary tightening.

Inflation Outlook Spike: 2026 Forecast at 28%

Central Bank Governor Fatih Karahan announced in the third inflation report that year‑end inflation for 2026 is expected to hit 28%.

Policy Framework and Interim Targets: 2026‑2028

■Interim targets: 24% (2026), 15% (2027), 9% (2028)

■Medium‑term inflation stability projected at 5%.

■Monetary tightness supported by an average funding cost of 40%.

Commodity‑Driven Shocks and TL Import Price Assumptions

■Higher motor fuel, natural gas and other commodity prices pushed up assumptions for TL‑denominated import costs.

■Adjustments for the e‑seal mobile‑app regulations and upward revisions in food price assumptions also fed into the forecast.

Market Dynamics and Potential Impact on BIST 100

■Tight financial conditions are likely to dampen domestic demand, potentially increasing BIST 100 volatility.

■A weakening of inflation inertia in services (rent, education) could bolster real consumption spending.

■Ongoing energy price uncertainty may curb investors' risk appetite.

■28% inflation target will pressure real interest rates upward.

■24% interim target steers policy decisions toward continued tightness.

■5% medium‑term goal aims to restore long‑term investor confidence.

■40% funding cost will raise external borrowing costs while constraining local liquidity.

Markets should interpret the upward revision of TCMB’s inflation forecast as a clear sign that monetary policy will remain restrictive. While the BIST 100 may face short‑term technical corrections, the preservation of interim targets and the expectation of inflation returning to 5% in the medium term support a longer‑term equity buying case. Positions sensitive to the services sector and FX volatility warrant a fresh risk‑management review.