The Central Bank of the Republic of Türkiye cut its one-week repo rate by 200 basis points to 39.00% on 23 October 2025, delivering the second reduction of the fourth-quarter easing cycle. The decision marks a continuation of the monetary policy pivot that the bank began in September, as policymakers judge that the disinflation process has advanced sufficiently to allow further unwinding of the restrictive rate stance built up during an extended tightening campaign over the previous two years. The rate now sits at its lowest level since the CBRT began the current phase of easing.
The October cut follows a reduction made earlier in the fourth quarter, bringing the cumulative easing since September 2025 to 350 basis points. The pace of the adjustment reflects the bank's assessment that the balance of risks between sustaining the disinflationary trend and supporting domestic economic activity has shifted enough to justify a relatively swift normalisation, even as inflation remains at elevated levels compared with Türkiye's peer economies in the European region and further afield.
INFLATION CONTEXT SHAPES EASING PATH
Turkish inflation stood at approximately 38% in October 2025, a figure that remains high in absolute terms but represents a substantial decline from the peak levels recorded in 2024, when annual price growth exceeded 80%. The gap between the policy rate and the rate of consumer price growth has narrowed considerably through the easing cycle, with the repo rate now sitting close to prevailing inflation rather than substantially above it as was the case when the tightening phase was at its most restrictive.
The CBRT's approach to the easing cycle has been guided by the view that Turkey's disinflation path is on track and that forward-looking indicators support a continued reduction in borrowing costs. The bank has signalled that future decisions will remain data-dependent, with monthly inflation releases and the trajectory of domestic demand among the key variables it is monitoring as it calibrates the pace of any further adjustments. The proximity of the repo rate to current inflation is a development the bank's Monetary Policy Committee will weigh carefully in determining whether to maintain the current cadence of cuts.
CUMULATIVE CUTS SINCE SEPTEMBER
With 350 basis points of cuts delivered across the September and October meetings, the CBRT has moved at a meaningful pace through the initial phase of easing, compressing the repo rate from the levels maintained at a significant premium to inflation during the peak tightening period. The bank's stated policy framework has emphasised the importance of maintaining a positive real interest rate during the disinflation process, a condition that policymakers believe remains broadly satisfied despite the scale of nominal rate reductions delivered so far.
Markets and analysts will be watching closely to determine whether the pace of easing slows at the final meeting of the fourth quarter or whether the CBRT continues to move in increments of similar size. The lira's performance in currency markets, developments in the current account balance, and the degree to which core inflation continues to decelerate will all feature in the Monetary Policy Committee's deliberations. The bank has not signalled any specific commitment to a particular path for rates beyond what incoming economic data support at each successive meeting.