- Decision
- Lower
- Rate change
- 250 bps
- one-week repo auction rate
- 40.5%
The Central Bank of Türkiye’s Monetary Policy Committee cut the one-week repo rate by 250 bp to 40.5 %, simultaneously trimming the overnight corridor to 39 %–43.5 %, stating that August data show a slower underlying inflation trend and that domestic demand remains at disinflationary levels even as food and inertial services prices keep headline pressures elevated and risks from expectations and global factors persist. This follows a 300 bp reduction in July that took the policy rate to 43 %. Policymakers said the current tight stance will stay in place until the 5 % medium-term inflation target is secured, with the policy rate set each meeting to preserve the necessary degree of monetary tightness and tightened further if the inflation path deviates markedly; liquidity will continue to be actively managed and macro-prudential tools deployed as needed to support transmission.
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.