Global Interest Rates and Oil Shortage for Economic Management
While Turkey plans its disinflation process and interest rate cuts, global expectations of rate hikes and a surge in oil prices stand out as two major external risks facing the administration.
The roadmap followed by Treasury and Finance Minister Mehmet Şimşek and the economic administration is facing new risks driven by rate hike signals from the global front and the rise in oil prices.
Global Interest Rate Hike Expectations
While rate hikes in the United States are once again becoming a serious possibility, long-term interest rates in the bond markets are also showing an upward trend.
The increasing cost of money worldwide makes it harder for developing countries like Turkey to attract capital while narrowing the room for domestic rate cuts.
The Rise in Oil Prices
Brent crude oil prices are rising with an increase exceeding three percent, and behind this movement lies the risk of conflict between the United States and Iran.
The fact that transits through the Strait of Hormuz remain below normal levels and external dependency negatively affect the energy import bill and the current account deficit.
Central Bank Risks
Central Bank Governor Fatih Karahan had stated in a previous inflation report presentation that potential permanent increases in oil and natural gas prices pose upside risks.
If this climb in energy prices proves permanent, the end-of-2026 inflation forecasts and calculations regarding economic policies are expected to be revised.
Critical Calendar Process
The economic administration is awaiting the August inflation figures to be announced in the coming weeks, along with the decisions of the Central Bank of the Republic of Turkey and the US Federal Reserve.
The functioning of the disinflation program, conducted in the shadow of intensifying external headwinds and regional conflicts, is being closely monitored.