- Decision
- Lower
- Rate change
- 300 bps
- one-week repo auction rate
- 43%
The Monetary Policy Committee of the Central Bank of Türkiye lowered the one-week repo rate by 300 bp to 43.0 percent, alongside 300 bp cuts in the overnight lending and borrowing rates to 46.0 percent and 41.5 percent respectively, citing a flat underlying inflation trend in June, an expected but temporary uptick in July, and a stronger disinflationary impulse from softer domestic demand. After hiking the policy rate by 350 bp to 46 percent in April and holding it in June, this move resumes the easing seen earlier in the year. The Committee reaffirmed that the tight stance will be preserved until price stability is secured and said it will calibrate the policy rate “meeting-by-meeting” to keep conditions consistent with its disinflation path, ready to deploy all tools or additional macro-prudential measures if credit or deposit market strains threaten transmission. It noted ongoing risks from inflation expectations, pricing behaviour, geopolitical developments and rising trade protectionism, and stressed that liquidity will be actively managed to help reach the 5 percent medium-term inflation target.
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.