- Decision
- Maintain
- Rate change
- 0 bps
- one-week repo auction rate
- 40%
The Central Bank of Türkiye’s Monetary Policy Committee (MPC) held the one-week repo auction rate at 37%, citing a decelerating underlying inflation trend and weak domestic demand, while flagging elevated energy prices as an upside risk. Over the past year, the policy rate fell from 43% in September 2025 to 37% in January 2026 through cumulative cuts of 600 basis points and has since been held. The MPC maintained the overnight lending and borrowing rates at 40% and 35.5%, respectively, and said it would continue to monitor liquidity closely, use liquidity tools effectively and deploy additional macroprudential measures if unexpected credit or deposit market developments impair transmission. Recent inflation readings and leading indicators point to disinflation despite monthly fluctuations, while economic activity data and limited pass-through from supply shocks confirm demand weakness. Geopolitical developments and elevated energy prices pose risks through costs, activity and expectations. The MPC pledged to maintain tight policy until price stability is achieved and create conditions for inflation to reach the 5% medium-term target, signalling further tightening if the inflation outlook deteriorates significantly and persistently.
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.