Central Bank outlines 2026 monetary policy roadmap

ANKARA

Türkiye's Central Bank released its 2026 Monetary Policy Text on Dec. 29, providing a roadmap for next year's policies, including continued efforts to strengthen international reserves and improve their composition.

The bank's Monetary Policy Committee (PPK) will hold eight meetings in 2026 according to a pre-announced schedule.

The text emphasizes that price stability is a prerequisite for sustainable growth and societal welfare, with central banks making their greatest contribution to welfare by achieving it.

In this context, the Central Bank's primary goal remains to achieve and maintain price stability, with all policy tools to be used decisively toward this end.

The bank will also consider financial stability as a supporting element for price stability.

Indicators guiding economic units on inflation's future path will be the medium-term "inflation target," while the short-term will focus on year-end "interim targets."

The inflation target set with the government remains at 5 percent, with the uncertainty band — as in previous years — at 2 percentage points around the target.

The text stresses that monetary policy in 2026 will be shaped to provide the monetary and financial conditions needed to bring inflation to the medium-term 5 percent target.

Policy decisions will continue to be based on analyses of inflation developments and expectations, pricing behaviors, demand factors influenced by monetary policy, supply-side developments, internal-external balance, saving trends, credit developments, financial conditions, liquidity and all other factors affecting price stability, considering decisions' lagged effects.

The level of monetary tightness required for lasting price stability will be set to guide inflation to interim targets in the short term and the 5 percent target in the medium term, as shared in inflation reports.

If unanticipated developments occur in credit and deposit markets, the monetary transmission mechanism will be supported by additional macroprudential measures.

The text highlights that the bank's primary communication tools are PPK announcements and the Inflation Report.

"The Inflation Report will be published four times a year. To ensure effective communication of monetary policy practices with the public, the Inflation Report will continue to be introduced through informational meetings."

The bank also draws attention to the importance of strengthening international reserves for monetary policy effectiveness and financial stability.

"The strategy of accumulating international reserves will continue in 2026 as long as market conditions allow," it said.

The calculation period for credit growth rates has been extended from 4 weeks to 8 weeks, providing flexibility in managing credit growth limits.

The maximum merchant discount rate charged by banks to commercial customers has been differentiated for bank cards, reduced to 1.04 percent, with the maximum blocking period shortened to 15 days.

"The growth and composition of credit will be ensured in a framework that supports the disinflation process and the monetary transmission mechanism."

The text reiterates the Central Bank's main goal of achieving and maintaining price stability.

"In this context, the Central Bank will use the one-week repo auction interest rate as its main policy tool. In addition, all policy tools, including liquidity management tools and the macroprudential framework, will be used toward this goal. Financial stability will also be considered as a supporting element for price stability."