The Central Bank of Türkiye cut its policy rate, the one-week repo auction rate, to 36%, citing evidence that underlying inflation is decelerating while domestic demand remains weak. The move followed cuts in late 2025 and a 100-basis-point reduction to 37% in January 2026, followed by holds through September. The central bank also lowered its overnight lending and borrowing rates to 39% and 34.5%, respectively, and said it would continue closely monitoring liquidity and using liquidity management tools effectively. Despite monthly fluctuations, recent inflation data and leading indicators confirmed the slowdown in underlying inflation, while economic activity data and limited pass-through from supply shocks to domestic prices indicated continued demand weakness. Policy remains geared towards achieving the 5% inflation target over the medium term. Elevated energy prices due to ongoing geopolitical tensions remain an upside risk to inflation. The central bank said it would maintain a tight monetary policy stance until price stability is achieved, determine the size and timing of policy steps prudently on a meeting-by-meeting basis according to the inflation outlook, and tighten policy if that outlook deteriorates significantly and persistently.
Central Bank of Türkiye Cuts Policy Rate to 36%
The Central Bank of Türkiye cut its one-week repo auction rate to 36%, citing slowing underlying inflation and weak domestic demand, and lowered overnight lending and borrowing rates to 39% and 34.5%, respectively. It pledged to maintain tight monetary policy until price stability is achieved and tighten policy if the inflation outlook deteriorates significantly and persistently.