April 2026

March was a month marked by high levels of uncertainty due to the conflict between U.S.-Israel and Iran. Amid rising geopolitical tensions, the global supply shock arising from the traffic disruptions through the Strait of Hormuz caused sharp fluctuations in energy prices. This situation intensified inflationary pressures on a global scale while creating fragility in expectations regarding economic activity as well. In March, leading central banks left their policy rates unchanged, and officials’ statements, highlighting the potential upward pressure the war could exert on inflation and signaling that tightening measures could be implemented if necessary, were closely monitored. Leading indicators for March showed that global economic confidence deteriorated and that economic activity varied across countries and sectors. In this context, the facts when the tensions in the Middle East will end and how long their effects will last are crucial in terms of the pace of global economic activity and central bank decisions.

In Türkiye, leading indicators for March pointed that manufacturing sector’s production was under pressure due to the rising cost pressures, driven by escalating tensions in the Middle East, and weak demand conditions. During this period, confidence indices declined, and inflation expectations deteriorated across all sectors. Taking into account the developments in financial markets at the beginning of the month, the CBRT suspended one-week repo auctions and raised the funding cost to 40%. In the minutes of its March 12 meeting, the CBRT highlighted the uncertainties created by geopolitical developments. The trajectory of geopolitical developments will be closely monitored in the coming period in terms of inflation, the current account balance, and reserve outlook.