- Decision
- Raise
- Rate change
- 350 bps
- one-week repo auction rate
- 46%
The Monetary Policy Committee of the Central Bank of Türkiye raised the one-week repo rate by 350 bp to 46 percent and lifted the overnight corridor to 44.5–49 percent at its 17 April meeting, arguing that stronger-than-expected domestic demand, a looming uptick in April core goods prices and still-elevated inflation expectations threaten the disinflation process even though the underlying inflation trend eased in March. After cutting the policy rate by a cumulative 500 bp in January and March, the Committee has now reversed course. It underscored that recent market volatility has been met with rapid liquidity measures and pledged to keep liquidity conditions tight to reinforce monetary transmission. The authorities noted that domestic demand remains above projections despite some first-quarter slowdown, while real lira appreciation and improved expectations are aiding disinflation. Rising global trade protectionism is being watched for its potential impact on activity, commodity prices and capital flows. Policymakers committed to maintaining a tight stance until a sustained decline in inflation secures the 5 percent medium-term target and signalled readiness to tighten further should the inflation outlook deteriorate.
Rate evolution
From June 2025 to April 2026, the policy rate fell by 900 basis points from 46% to 37%, after an initial hold, through successive cuts before the Committee paused in March and April 2026 and held the rate through July 2026 and in its latest decision. The reductions were driven by an overall softer underlying inflation trend and demand conditions judged to be disinflationary, while the Committee said tight monetary conditions, Turkish lira appreciation and improving inflation expectations would support disinflation, even as food prices, service items with high inertia, inflation expectations and pricing behaviour remained risks and external uncertainty was initially monitored mainly through geopolitical developments and trade protectionism.
In the later decisions, the Committee kept the rate at 37% as geopolitical uncertainty intensified and energy prices remained elevated, while recent inflation figures and leading indicators suggested that the underlying trend of inflation was decelerating despite monthly fluctuations. Data on economic activity and the limited pass-through of supply shocks to domestic prices confirmed weak domestic demand, but elevated energy prices posed an upward risk to inflation. The Committee reiterated that policy would remain tight until price stability is achieved, that it remained highly attentive to upside inflation risks and that it stood ready to tighten in case of a significant and persistent deterioration in the inflation outlook.