- Decision
- Lower
- Rate change
- 100 bps
- One-week repo auction rate
- 37%
The Monetary Policy Committee of the Central Bank of Türkiye cut the one-week repo rate by 100 bp to 37 percent and lowered the overnight corridor to 40 percent/35.5 percent, citing a limited rise in the underlying inflation trend despite firmer January consumer prices driven by food and demand conditions that still favour disinflation, though at a moderating pace. This move deepens the easing cycle that has taken the repo rate down by 900 bp from 46 percent since April 2025. The central bank reaffirmed that the current “tight” stance will be preserved until price stability is secured, pledged to tighten again should the inflation path deviate from interim targets, and said liquidity will be managed proactively and, if needed, backed by macroprudential tools. Inflation expectations and pricing behaviour remain risks, but the Committee aims to steer conditions towards its 5 percent medium-term target and will continue to set policy in a predictable, data-driven framework.
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.