June 2026

In May, as negotiations between the US and Iran continued, uncertainties surrounding the ceasefire remained a key issue on the agenda. Tensions in the Middle East were also a major topic of discussion at the long-awaited Trump-Xi meeting on May 14-15, where the two leaders reportedly agreed on keeping the Strait of Hormuz open and preventing Iran from acquiring nuclear weapons. Oil prices fluctuated throughout May, and the continued high levels of energy and commodity prices led the production costs and consumer prices to rise rapidly in major economies. Indeed, the minutes of the latest meeting showed that Fed officials adopted a more cautious stance on inflation outlook. In June, the actions of global central banks in response to inflationary pressures will be closely watched. While European and Japanese central banks are expected to raise interest rates, no change in interest rates is anticipated at the Fed meeting on June 16-17, which will be chaired for the first time by newly sworn-in Kevin Warsh.

The Turkish economy, which grew by 2.5% yoy in the first quarter of 2026, recorded its slowest quarterly growth since the second quarter of 2024, according to seasonally and calendar adjusted data. During this period, the continued increase in the contribution of private consumption expenditures to growth indicates that domestic demand remained strong despite the tight monetary stance, while the contraction in industrial production was noteworthy. Leading indicators for the second quarter signal a recovery in manufacturing, it is assessed that part of this recovery stems from firms bringing forward their demand as a precaution against uncertainties. In the coming period, the effects of geopolitical and domestic developments on inflation, as well as the CBRT’s meeting on June 11th, will be closely monitored.