September 2026

Amid persistently high global uncertainty in August, geopolitical tensions in the Middle East remained relatively subdued for most of the month before escalating again in its final days. Tensions also rose on the Russia-Ukraine front, triggering a sharp increase in wheat prices. These developments added to already elevated global inflationary pressures, while Fed Chair Kevin Warsh’s remarks at Jackson Hole that inflation remained above target strengthened expectations that the Fed would raise interest rates in September. In addition to inflationary risks, concerns over rising public debt and high budget deficits caused the upward trend in long-term bond yields that began in July to continued in August, adding to the pressure on financial conditions. Following the rise in Euro Area inflation to its highest level in nearly three years in August, an interest rate hike by the ECB at its September meeting came to be viewed as almost certain. BoJ is also expected to raise its policy rate at its September meeting. In September, geopolitical developments and the meetings of major central banks will be closely monitored, along with the Trump-Xi meeting scheduled to take place in Washington on September 24.

In Türkiye, second-quarter growth data indicated that economic activity lost momentum on an annual basis, while the decline in private consumption’s contribution to growth confirmed the slowdown in domestic demand. Among the leading indicators for August, the improvement in consumer and real sector confidence contrasted with the continued weakness in demand conditions in the manufacturing sector, suggesting that the recovery in expectations has yet to be reflected clearly in current economic activity. Although the decline in annual inflation continued in August, the renewed escalation in geopolitical tensions toward the end of the month is keeping uncertainty surrounding the inflation outlook elevated through its potential impact on energy prices. CBRT’s resumption of one-week repo auctions in August, which brought the CBRT’s weighted average cost of funding in line with the 37% policy rate, marked an important step toward normalization in the operational framework of monetary policy. The messages from the CBRT’s September 10 meeting, following its decision to raise its year-end inflation forecast to 28% in the latest Inflation Report, as well as developments regarding the Medium-Term Program expected to be announced on September 6, will be closely monitored.