The Central Bank of the Republic of Türkiye held its one-week repo rate at 37.00% at its March 2026 Monetary Policy Committee meeting, keeping policy unchanged as geopolitical uncertainty linked to the risk of a broader US-Iran conflict disrupted what had been an anticipated continuation of the easing trajectory the bank had been pursuing. The decision was entirely aligned with market expectations: all ten economists surveyed by Reuters ahead of the meeting had predicted that the rate would be left unchanged, making the outcome one of the most widely forecast holds the bank had delivered in recent cycles.
The pause marks a departure from the rate-cutting path that the CBRT had been navigating prior to the escalation of tensions in the Middle East. Elevated conflict risk introduced fresh uncertainty over global energy prices and capital flows into emerging markets — two variables of particular significance for Türkiye given the country's structural reliance on energy imports and the well-established sensitivity of the lira to shifts in global risk appetite. The bank's accompanying statement indicated that the external environment warranted a cautious approach before any further reduction in the policy rate could be considered appropriate.
UNANIMOUS MARKET FORECAST AND POLICY SIGNALS
The unanimity of the Reuters poll, with all ten surveyed economists calling a hold, reflects the degree to which the central bank's pre-meeting communications had successfully conveyed its intentions to market participants. In the weeks preceding the March decision, the CBRT had signalled that it was monitoring global conditions carefully and that its approach remained data-dependent — language that analysts widely interpreted as ruling out any active adjustment at the March meeting. The alignment between the unanimous consensus forecast and the actual outcome indicates that the decision did not carry material surprise for financial markets and that implied volatility in lira-denominated instruments ahead of the announcement was commensurately subdued.
Türkiye's disinflation process, which had formed the backbone of the central bank's justification for its earlier rate reductions from the peaks of the prior tightening cycle, remains the medium-term objective of monetary policy. The CBRT had been carefully reducing its policy rate as inflation data showed improvement, and the March hold represents a pause in that process rather than a reversal of direction. The committee's view on when easing can resume will depend in material part on the evolution of energy prices and the broader geopolitical environment in the weeks after the meeting.
ENERGY RISK AND THE INFLATION OUTLOOK
The specific concern associated with US-Iran conflict risk centres on the potential for a material escalation to push oil prices sharply higher, which would worsen Türkiye's trade deficit and add upward pressure to an inflation rate that the central bank has been working systematically to reduce. Türkiye imports the overwhelming majority of its oil and gas requirements, a structural characteristic that leaves the domestic economy disproportionately exposed to supply-side energy shocks relative to peers with domestic energy production or access to long-term contracted supply at fixed prices.
The March decision leaves the repo rate at 37.00%, a level that continues to represent a substantially positive real interest rate relative to current inflation, providing a degree of monetary anchor for the lira and reinforcing the bank's credibility with international investors who have been monitoring Türkiye's disinflation journey. The Monetary Policy Committee is expected to reassess the position at its next scheduled meeting, at which point updated domestic inflation data, the trajectory of energy markets, and any developments in the Middle East conflict will all be weighed in determining whether the conditions are in place for further rate reductions to resume.