Turkey's annual consumer price inflation fell to 38.1% in February 2026, dropping below 40% for the first time since mid-2023. The decline from its May 2024 peak of 75.4% reflects the impact of aggressive monetary tightening by the Central Bank of the Republic of Turkey (CBRT), which has maintained its benchmark rate at 42.5% since December 2024.
Orthodox Policy Shift
The disinflation follows a dramatic policy reversal. President Erdogan, who had previously pressured the central bank to keep rates low despite soaring prices (famously describing interest rates as "the mother of all evil"), allowed the appointment of Governor Hafize Gaye Erkan and later Fatih Karahan, who implemented conventional tightening. The policy rate was raised from 8.5% to 50% between June 2023 and March 2024 before being gradually reduced to 42.5%.
The approach has won cautious approval from international investors. Turkey's credit default swap spreads narrowed, and foreign portfolio investment returned modestly to Turkish assets after years of outflows.
Lira Stabilisation
The Turkish lira traded at approximately 38.5 per US dollar in March, having stabilised after years of sharp depreciation. Between 2021 and 2024, the lira lost over 80% of its value against the dollar. The stabilisation, while welcome, means the lira's real effective exchange rate has appreciated, potentially hurting export competitiveness.
Turkish citizens have been gradually unwinding their "dollarisation" of savings. The share of foreign-currency deposits in total deposits fell to 35% from a peak of 65% in late 2023, as high lira interest rates made domestic savings more attractive.
Crypto Adoption in High-Inflation Economies
Turkey consistently ranks among the top ten countries globally for cryptocurrency adoption, according to Chainalysis. Years of double-digit inflation and currency depreciation have driven many Turks toward USDT and Bitcoin as stores of value. The Turkish Capital Markets Board introduced licensing requirements for crypto platforms in 2024, with major exchanges including BtcTurk and Paribu adapting to the new framework.
For Turkish inflation data, visit Central Bank of Turkey. For Turkish economic statistics, see TurkStat.