JPMorgan economist Fatih Akcelik says inflation momentum in Turkey remains high, prompting a recommendation for cautious and gradual interest-rate reductions during the second half of the year. In a note on Turkey's macroeconomic outlook, Akcelik and his team project headline inflation will be 29% by the end of 2026.
The bank argues that the persistence of inflationary pressures underpins the case for measured rate cuts and for keeping real interest rates at elevated levels. That view reflects concern that rapid easing could undermine progress on price stability while the forces behind inflation remain active.
On external balances, JPMorgan reports that Turkey's basic current account position has shifted closer to levels previously observed during episodes of foreign exchange stress. The bank expects that a combination of lower oil prices and slower economic growth in the second half of the year will reduce the risk of further deterioration in the current account.
Labor-income dynamics are also highlighted. JPMorgan forecasts the gap between the minimum wage and the so-called hunger threshold will widen to about 35% by the end of 2026. The bank interprets the magnitude of the minimum wage increase set in December as an indicator of political timing - specifically the scheduling of elections and the policymaking that typically precedes them.
Fiscal policy is judged to be neutral for the current period, a shift from the restrictive stance maintained in 2025. That assessment suggests neither a stimulative nor a contractionary fiscal impulse is expected to materially alter the inflation path in the near term.
Leading indicators point toward subdued activity in the second quarter, but JPMorgan cautions that weak growth will only marginally help disinflation. The bank identifies several variables it sees as decisive for inflation in the coming months: exchange rates, minimum-wage revisions, food-price movements and energy costs.
Key variables to watch:
- Exchange-rate developments
- Minimum wage adjustments
- Food price trends
- Energy price movements