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Türkiye’s top economic officials on Wednesday discussed the effects of credit growth limits, which are closely monitored by markets, and possible policy steps that could be taken regarding their implementation, according to a statement.
The talks came at the meeting of the Financial Stability Committee, chaired by Treasury and Finance Minister Mehmet Şimşek and including Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan, as well as other top economic authorities.
The meeting came a day after the chief executive of Türkiye’s biggest private bank said the real sector is likely to see financing constraints begin to ease around mid-2026.
The committee also reviewed the global and domestic macroeconomic outlook, recent developments in the real sector and their impact on the financial system, a statement by the Treasury and Finance Ministry said.
“The effects of credit growth limitations and potential implementation steps have been addressed,” it noted.
The committee also analyzed the current status of a scheme shielding deposits against currency depreciation, a measure authorities began phasing out gradually in 2023 following a pivot toward more conventional economic policies.
Officials discussed scenarios regarding the future of the foreign exchange-protected Turkish lira deposits scheme, known as KKM, which is believed to be on the verge of ending, the statement said.
Officials and the central bank have said the scheme would be terminated by the end of 2025, though many bankers believe the exit could come even sooner.
Under the scheme, adopted in late 2021 to help reverse dollarization and counter a steep fall in lira, the Central Bank of the Republic of Türkiye (CBRT) had been protecting deposits by covering depreciation costs.
But authorities have been seeking to phase it out gradually and transition deposits into regular lira accounts, in part by dissuading companies and individuals from renewing the KKM accounts.
The value of deposits covered by the scheme has shrunk from a peak of $140 billion to below $11.8 billion, a figure now seen as negligible in the context of Türkiye’s $1.3 trillion economy. The exit from KKM has progressed much faster than initial market expectations.
Financing strains to ease as of mid-2026
On Tuesday, Işbank CEO Hakan Aran said tight financing conditions and elevated borrowing costs are expected to begin easing around May next year.
“When making projections, the real sector should keep in mind that access to credit will remain challenging and subject to restrictions, with borrowing costs likely to stay above inflation,” Aran told an event in Istanbul.
Last month, the Central Bank of the Republic of Türkiye (CBRT) cut its key policy rate by 300 basis points to 43% as it relaunched an easing cycle that was disrupted by political turmoil earlier this year, as markets calmed and disinflation continued.
Official data last week showed consumer price inflation slowed to 33.5% in July, the lowest rate since November 2021, having peaked at 75% in May last year.
Aran explained that he had initially forecast financial conditions to start loosening at the beginning of 2026, but an unexpected four-month tightening as of March forced him to push that projection back.
From May next year, he said they anticipate a normalization process, with restrictions potentially being lifted, and a renewed prioritization of economic growth in Türkiye, with monthly inflation rates frequently falling below 1%.
The central bank had hiked its benchmark policy rate to 46% from 42.5% in April, reversing an easing cycle that had begun in December, and lifted its overnight lending rates to 49 % following market volatility over the arrest in March of Istanbul Mayor Ekrem Imamoğlu.
Imamoğlu was jailed pending trial over graft charges.
Most of that tightening has since been unwound, with the CBRT beginning to cut rates last month.
Aran stated that, starting from May 2026, Türkiye would enter a period in which “everyone can foresee what lies ahead.”
Provided there is no interruption in economic policies, he said inflation could fall to 29% by year-end, while the policy rate may settle around 35%.
The central bank’s year-end inflation midpoint estimate currently stands at 24%, in a forecast range of 19% to 29%. The bank is due on Thursday to present its third quarterly inflation report of the year.
