Türkiye approaches the end of 2025 with the Central Bank of the Republic of Türkiye (TCMB) running one of the tightest monetary stances in the world. The baseline expectation built into current policy is threefold: gradual disinflation, a policy rate that stays elevated until progress is clearly sustained, and cautious stabilization of the lira. Each leg of that outlook matters for businesses and exporters, and through 2025 the trend has been moving in the right direction.
Where is Turkish inflation heading?
The starting point was high. Consumer inflation exceeded 65% in early 2024, reached approximately 68.5% year-over-year by March 2024 and peaked at 75.45% in May 2024. The drivers are well identified: steep food and energy price increases, robust wage growth following successive minimum-wage increments, lira depreciation feeding import costs, and global supply disruptions.
Inflation has since decelerated — to 32.9% in October 2025 — and forecasts point to further gradual disinflation if tight monetary policy persists. Analysts caution that progress will be slow: core inflation is sticky, wage pressure is ongoing, and Türkiye's import dependency — especially in energy — keeps the exchange-rate pass-through channel wide open. Lasting price stability is seen as requiring not just high rates but structural reforms: improved labor productivity, reduced import dependency, fiscal discipline and credible, independent monetary policymaking.
How far will the TCMB cut from its 50% peak?
The TCMB raised its benchmark rate to 50% by March 2024, an aggressive tightening cycle that diverges sharply from the easing seen in the US and Europe and from the steadier stance of most MENA central banks. Officials have committed to keeping policy tight until there is measurable, sustained progress against inflation.
The TCMB began easing in December 2024 and, after a temporary tightening in spring 2025, had cut the policy rate to 39.5% by late October 2025; analysts expect further cuts to stay gradual and data-dependent. Meanwhile, households and businesses face high borrowing and mortgage costs that pressure budgets and hold back investment. The intended payoff is medium-term: restored credibility, a more stable macro environment and improved investment sentiment.
What is the outlook for the lira?
The lira declined over 36% against the US dollar in 2023 amid unconventional policy, high inflation and persistent trade deficits. The return to orthodox policy helped rebuild foreign exchange reserves by mid-2024, supported by external borrowing and a softer approach to interventions.
Confidence is still being rebuilt. Foreign direct investment has not returned to previous levels, and the trade balance remains burdened by energy imports. The end-2025 scenario most forecasters sketch is cautious stabilization — contingent on continued orthodoxy, improving sentiment and progress on the trade deficit. External shocks and geopolitical tensions could still move the currency sharply in either direction.
How should businesses and exporters position?
- Policymakers need to reinforce monetary discipline, fiscal credibility and central bank independence to anchor expectations.
- Investors should watch real interest rates, prepare for volatility, and use diversification and currency hedging.
- Businesses reliant on imports or FX debt should strengthen local supply chains, negotiate contracts in stable currencies and expand export markets.
For Turkish manufacturers, hard-currency export revenue is itself a hedge: earning in euros and dollars while carrying lira-denominated costs cushions currency swings. That logic underpins the export focus of renewable heating producers shipping PVT collectors and R290 heat pumps to European markets. For disciplined, export-oriented manufacturers such as Solimpeks, which exports to 96+ countries, the 2025 environment is manageable, and the disinflation trend is working in their favour.
