Central Bank cuts interest rates by 150 basis points, eyes turn to the market: Inflation forecast announced

As developments regarding economic policies continue, Prof. Dr. Duran Bülbül made a comprehensive assessment of the Central Bank's latest interest rate cut decision. Bülbül's statements included striking findings regarding the picture emerging in the interest-inflation relationship and future economic projections.

"IT IS CLEAR THAT YEAR-END TARGETS ARE NOT BEING MET"

Prof. Dr. Duran Bülbül stated that there has been inconsistency in the forecasts made by the Central Bank throughout the year, expressing that decisions have moved away from predictability. Bülbül emphasized that the Central Bank has failed to create a sustainable policy in its two primary duties: inflation and interest rate management.

Bülbül made the following findings in his assessment:

He stated that the Central Bank has continuously revised its year-end inflation and interest rate forecasts since the beginning of the year, that these forecasts have changed once again with the latest interest rate cut, and that these changes "reveal an unstable economic outlook."

Bülbül said that the latest decision shows that the Central Bank's will to control inflation has weakened.

"REAL INTEREST RATE TARGET HAS EFFECTIVELY CHANGED"

Prof. Dr. Duran Bülbül stated that with the policy rate being lowered to 38%, the target of keeping the real interest rate in the 5-point band is no longer valid. According to Bülbül, this new picture has completely changed the projections regarding year-end inflation.

Bülbül noted that year-end inflation will occur in the 32.5–33 band, whereas the Central Bank had previously predicted this rate in the 16–19 band, and that a deviation of approximately 50% has occurred with the new estimates.

Prof. Dr. Bülbül said that this deviation means that the inflation rates targeted for the end of 2025 do not appear possible even by the end of 2026. Additionally, he shared the forecast that, according to the current interest rate decision, inflation will remain in the 25% band at the end of 2026, and interest rates will hover around 20% throughout 2026.

"TURKEY WILL PAY AN ECONOMIC PRICE FOR AT LEAST ONE MORE YEAR"

Prof. Dr. Duran Bülbül expressed the view that the Central Bank's recent steps have increased economic instability.

According to Bülbül, the fiscal management, the Central Bank, and the medium-term plan forecasts present an incompatible and inconsistent outlook that does not confirm one another. Stating that "the economy requires stability, predictability, and consistency," Bülbül expressed that this cannot be achieved with the current picture.

MINIMUM WAGE ASSESSMENT: "26,500 TL IS BELOW THE HUNGER THRESHOLD"

Prof. Dr. Duran Bülbül also shared his expectations regarding the minimum wage, which is expected to be announced in the coming days. Bülbül said that budget data technically suggests the minimum wage should be around 28,500 TL with a 30% increase.

However, he emphasized that current indicators:

Show that the minimum wage will remain at the level of approximately 26,500 TL.

Stating that this situation points to a figure below the hunger and poverty threshold, Bülbül summarized the picture as follows:

He said that in a country where the national income per capita is at the 60 thousand lira level, the fact that the minimum wage will remain in the 26.5–28.5 thousand lira range is a separate subject of debate.

Bülbül stated that this picture shows that minimum wage earners will become even poorer in 2026.

News Source: 12punto