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Central banks hold the line as European industry stalls

Türkiye raised its inflation forecast and Norway retained the option of higher rates, while Eurostat reported stagnant June euro-area output. The releases show persistent price pressures colliding with fragile industrial growth.

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Türkiye raised its 2026 inflation forecast

Türkiye's central bank increased its year-end 2026 inflation forecast to 28 per cent when Governor Fatih Karahan presented Inflation Report 2026-III in İstanbul. The longer path still points lower: inflation is projected at 15 per cent by the end of 2027 and 9 per cent by the end of 2028 before settling at the 5 per cent medium-term target. Karahan linked part of the loss of momentum in disinflation to geopolitical shocks in energy and commodity prices. He said the weakening in domestic demand has become more pronounced while supply-side pressures offset some of that effect. The policy rate — the one-week repo auction rate — remains at 37 per cent, with the overnight lending rate at 40 per cent and the overnight borrowing rate at 35.5 per cent. The governor said the tight stance would be maintained decisively until price stability is achieved in line with the interim targets. The bank still sketches a multi-year descent in inflation, yet it has lifted the 2026 marker as energy, commodity and supply-side pressures have slowed the path. Keeping the policy rate high shows that the objective remains price stability, even as the near-term headline sits above earlier guidance.[1]

Norway held rates and kept a hike open

The policy rate was left unchanged at 4.25 per cent. Governor Ida Wolden Bache said inflation has slowed and come in lower than projected this summer but remains too high, and added that it may still become necessary to raise the rate. The Monetary Policy and Financial Stability Committee said a restrictive monetary policy is still needed to bring inflation back to the 2 per cent target. It judged that it is too early to conclude that the inflation outlook has changed materially since June, and pointed to elevated business costs that will keep feeding price pressures ahead. The rate therefore stays where it is while a further increase is not ruled out if the remaining gap to target does not close as hoped. The softer summer readings and the open door to a hike together show that inflation is still treated as unfinished business, even as the latest prints have improved. The policy message is that there will be no rush to ease and that the risk of business costs feeding into prices will stay under watch.[2]

Euro-area industrial output stood still

Seasonally adjusted industrial production was unchanged in the euro area in June and rose 0.2 per cent in the EU compared with May. Against June 2025, output was 0.1 per cent higher in the euro area and 0.6 per cent higher in the EU. Within the euro-area main industrial groupings, non-durable consumer goods rose 3.0 per cent, energy 1.5 per cent and durable consumer goods 0.3 per cent, while capital goods fell 1.4 per cent and intermediate goods 0.8 per cent. Denmark posted the largest monthly increase at 5.4 per cent and Luxembourg the largest fall at 10.7 per cent; over the year the strongest rise was in Lithuania at 7.7 per cent. Read alongside the same day's central-bank messages, the industrial figures show a growth surface that is barely moving while price pressures remain the main policy focus in Türkiye and Norway. Because the monthly soft spots sat in capital goods and intermediate goods, the stall is visible in investment-related production rather than only in consumer lines.[3], [1], [2]

References

  1. News sourceCentral Bank of the Republic of TürkiyeTürkiye's central bank raised its 2026 inflation forecast to 28 per cent↩1↩2
  2. News sourceNorges BankNorway held its policy rate at 4.25 per cent and kept a rise on the table↩1↩2
  3. News sourceEurostatEuro area industrial output stalled in June while the EU edged up↩
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