ISTANBUL  - Turkey's central bank kept its interim target of 16% for end-2026 inflation on Friday, and Governor Fatih Karahan said it was ready to tighten policy if inflation diverges significantly from targets.

The bank also left unchanged its 13-19% forecast range for the end of next year, at a presentation of its quarterly inflation report in Istanbul.

For the end of this year, Karahan said the bank also kept its interim target steady at 24%, albeit in a forecast range of 31-33%, up from 25-29%. The end-2027 interim target for inflation remained at 9%.

Karahan said inflation was above the forecast range in the past two months, with food inflation the main driver. An improvement in inflation expectations will be supported by a decisive policy stance, he added.

The lira was slightly weaker on the day at 42.2045 against the dollar as the governor continued speaking at the briefing.

At its previous inflation report briefing in August, the bank revealed that it was separating the targets from its inflation forecast ranges in a new strategy aimed at boosting transparency and confidence.

Previously, the bank presented the target as the midpoint of the forecast range. Separating the goal and the range could give markets a clearer indication of where policy might be heading.

Turkish inflation eased to 32.87% annually and 2.55% monthly in October, both below expectations. Price pressure in the previous two months were above expectations, prompting the central bank to slow its interest rate-cutting cycle.

It slowed easing with a 100 basis-point cut in its policy rate to 39.5% at its latest policy-setting meeting on October 23, flagging renewed inflation risks pointing to a slowdown in the disinflation process.

(Reporting by Ezgi Erkoyun and Can Sezer; Writing by Daren Butler; Editing by Jonathan Spicer)