Türkiye's Central Bank lowers policy rate to 36% after 5 consecutive holds
Türkiye's central bank cut its benchmark policy rate by 100 basis points to 36%, in accordance with market expectations, after holding rates steady for five consecutive meetings, Anadolu Agency reports.
The bank's Monetary Policy Committee, headed by Governor Fatih Karahan, lowered the one-week repo auction rate from 37%.
It also reduced the overnight lending rate from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%.
According to the committee, despite monthly fluctuations, recent inflation figures and leading indicators confirm a slowdown in the underlying inflation trend.
Economic activity data and the limited pass-through of supply shocks to domestic prices suggest that domestic demand remains weak, it added.
However, elevated energy prices stemming from ongoing geopolitical tensions continue to pose an upside risk to the inflation outlook.
The committee said it is closely monitoring how geopolitical developments influence inflation through costs, economic activity, and expectations.
“The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels,” it said.
Future rate decisions will take into account realized and expected inflation, as well as its underlying trend, to maintain the tightness needed to support the projected disinflation path in line with interim targets.
The size and timing of policy steps will be determined prudently on a meeting-by-meeting basis, with a focus on the inflation outlook.
“In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened,” the committee said, reiterating its attention to upside inflation risks.
Additional macroprudential measures will support monetary transmission if unexpected developments emerge in credit and deposit markets, while liquidity management tools will continue to be used effectively.
Earlier, it was reported that Türkiye expects 4.2% economic growth in 2027.