The Turkish Central Bank will continue to use all monetary policy tools in line with its price stability objective despite the negative impact of the war on the disinflation process, Governor Fatih Karahan has said.
Karahan made the remarks during a presentation to parliament’s Planning and Budget Commission, where he assessed the effects of geopolitical developments on inflation, energy prices and global growth.
“Geopolitical developments have been decisive in recent months,” Karahan said.
“Accordingly, we feel the effects of the war, particularly in energy and transportation service prices. We clearly saw the impact of this on inflation in April.”
Karahan said energy-related effects were likely to continue in the short term, adding that their impact on the medium-term inflation outlook would depend on the Central Bank’s monetary policy stance.
“We will take these factors into account when making monetary policy decisions in the coming period,” he said.
Karahan said rent and education services played an important role in keeping services inflation high in 2025, partly because both items were affected by backward indexation.
Still, inflation in both categories had declined significantly over the past year, he said, while services excluding rent and education had moved closer to the broader consumer inflation trend.
“The disinflation in rent and education is expected to continue,” Karahan said.
The Central Bank governor said the war had made the disinflation process more difficult but had not changed the bank’s commitment.
“The war may be negatively affecting the disinflation process, but it does not change our determination,” he said. “We will continue to use all monetary policy tools in line with our main objective of price stability.”
Karahan also said uncertainty over the global economic outlook had increased sharply because of geopolitical developments.
The war involving the United States, Israel and Iran, which began at the end of February, had caused a sharp rise in energy prices, he said, adding that the possible closure of the Strait of Hormuz posed a risk to global energy supply.
Leading indicators point to a slowdown in global economic activity, higher input costs and disruptions in supply chains, Karahan said.
“The global economy is facing a significant negative supply shock,” he said, adding that rising uncertainty was weighing on consumer and producer confidence.
Karahan said global growth was expected to lose momentum significantly in 2026, with growth forecasts revised downward in many economies, particularly those in the war zone.
“We expect Türkiye’s external demand to weaken accordingly,” he said.
