Increase in Dollar and Inflation Forecasts in Turkey; New Central Bank Report

The Central Bank of the Republic of Turkey (TCMB) has released the results of the market participants' survey for July 2026. This report, based on the opinions of 72 experts from the financial and real sectors of the economy, shows that expectations for key economic indicators, including exchange rates and inflation, have increased compared to last month [1].

Details of Changes in the Dollar Rate According to the published data, the market's forecast for the dollar rate at the end of 2026 has increased from 51.47 Lira last month to 51.55 Lira [4]. This upward trend is not limited to the end of the current year; market participants expect the dollar rate to reach 56.69 Lira in the next 12 months, showing significant growth compared to the previous forecast of 55.72 Lira [1][2]. These upward revisions reflect the concerns of economic actors regarding the decreasing purchasing power of the Lira and currency fluctuations in the coming months.

Inflation Outlook and Monetary Policies In the inflation sector, expectations for the Consumer Price Index (TÜFE) at the end of 2026 have increased from 29.14% to 29.21% [3]. Although this increase seems small, it indicates inflation stickiness and the difficulty of the containment path for the government's economic team. Additionally, the inflation forecast for the next 12 months has slightly increased to 23.95% [2]. In contrast, expectations for 24-month inflation have slightly decreased to 17.83%, showing relative optimism regarding the effectiveness of monetary policies in the long term [3].

Interest Rates and Economic Growth Participants in this survey expect the Central Bank of Turkey to maintain its policy interest rate at 37% during the July meeting [4]. Meanwhile, forecasts for Turkey's economic growth in 2026 have decreased from 3.2% to 3.1% [2]. The reduction in the economic growth forecast, alongside rising inflation, indicates the impact of contractionary policies on manufacturing activities and domestic demand. The website Doviz.com, reflecting this report, emphasized that markets are closely monitoring the Central Bank's potential reactions to this new data [4][5].

Final Market Analysis Overall, the results of the July 2026 survey show that the Turkish economy continues to struggle with structural challenges in managing exchange rates and price stability. The simultaneous increase in currency and inflation expectations raises the pressure on policymakers to maintain a strict monetary approach to prevent capital flight and an inflationary spiral [1][3].