- Decision
- Maintain
- Rate change
- 0 bps
- one-week repo auction rate
- 37%
The Central Bank of Türkiye’s Monetary Policy Committee kept the one-week repo auction rate at 37% in its June 11 decision, saying the underlying trend of inflation, which had risen in the first months of the year and increased again in April partly because of higher energy prices, decreased slightly in May, while first-quarter data pointed to slower economic activity and leading indicators suggested domestic demand would remain weak. The decision followed a 100 bp cut in January from 38%, after which the rate was held in March and April. The Committee also left the overnight lending and borrowing rates unchanged at 40% and 35.5%, respectively, and said monetary transmission would be supported with additional macroprudential measures if unanticipated developments emerge in credit and deposit markets, with liquidity conditions continuing to be monitored closely. It reiterated that the tight monetary stance will be maintained until price stability is achieved, with the medium-term inflation target at 5%, while geopolitical developments and related uncertainties are keeping energy prices volatile and elevated and are being watched for their effects on costs, activity and expectations. The Committee said future decisions will remain meeting-by-meeting and focused on the inflation outlook, and repeated that policy will be tightened if a significant and persistent deterioration in the inflation outlook occurs, while stressing continued attention to upside inflation risks.
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.