According to the regulator, the decision to continue restrictive monetary policy measures was made in light of “increasing inflationary pressures from both the supply side—driven by unfavorable trends in international energy prices, food, and raw materials, as well as from domestic demand, supported by favorable trends in household incomes.”
Thus, the NBM’s decision to raise the base rate is aimed at “curbing the growth of consumer prices, mitigating the spillover effects of supply shocks, encouraging savings at the expense of consumption, and to stabilize inflation expectations with the aim of bringing the annual inflation rate back within the target range.”
The NBM has updated its forecast and expects inflationary pressures to intensify through the fourth quarter of 2026 due to uncertainty regarding “the outcome of negotiations between the U.S. and Iran and the resumption of normal transit through the Strait of Hormuz, which has implications for international trade and global economic activity.”
In addition, the updated forecast is influenced by a number of risks and uncertainties related to the timing and scale of tariff adjustments for regulated services, the impact of the implementation of new fiscal policy, the adoption of a new law on the public sector payroll system, and the reform of local government administration.
