- Decision
- Lower
- Rate change
- 100 bps
- one-week repo auction rate
- 39.5%
The Monetary Policy Committee of the Central Bank of Türkiye lowered the one-week repo rate by 100 bp to 39.5%, and cut the overnight corridor to 38.0–42.5%, arguing that although demand conditions remain consistent with disinflation, the pace of disinflation has slowed and the underlying inflation trend picked up in September, with food prices increasingly threatening expectations and pricing behaviour. After raising the policy rate to 46% in April, the MPC has since delivered cumulative cuts of 650 bp through moves in July, September and now October. Alongside the rate reduction, the Committee affirmed the maintenance of a tight stance, pledged to deploy liquidity management tools as needed and said macro-prudential measures would backstop transmission if credit or deposit market dynamics diverge. It will continue setting the policy rate to preserve the tightness required for the projected disinflation path and reiterated that it stands ready to tighten policy should the inflation outlook stray from interim targets on the way to its 5% medium-term goal.
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.