Central Bank of Türkiye cuts repo rate by 100 basis points to 39.5%, slowing pace of easing

The Central Bank of the Republic of Türkiye (CBRT) cut its policy rate, the one-week repo auction rate, by 100 basis points to 39.5 per cent from 40.5 per cent on 23 October 2025. The Monetary Policy Committee also lowered the overnight lending rate to 42.5 per cent from 43.5 per cent and the overnight borrowing rate to 38 per cent from 39 per cent.

The reduction was smaller than the committee's previous moves. It followed a 250 basis point cut on 11 September, from 43 per cent to 40.5 per cent, and a 300 basis point cut in July, from 46 per cent to 43 per cent.

DISINFLATION SLOWING

The committee said the underlying trend of inflation increased in September. While recent data suggested demand conditions were at disinflationary levels, they also pointed to a slowdown in the disinflation process, it said, adding that the risks posed by recent price developments, particularly in food, had become more pronounced through inflation expectations and pricing behaviour.

Annual consumer price inflation rose by 0.34 percentage points to 33.29 per cent in September, the latest reading before the decision, according to the CBRT's review of official price data. Consumer prices rose 3.23 per cent in the month, with food and services prices standing out.

MEETING-BY-MEETING APPROACH

The CBRT said the tight monetary policy stance would be maintained until price stability is achieved and that the step size would be reviewed prudently on a meeting-by-meeting basis with a focus on the inflation outlook. It said policy would be tightened in case of a significant deviation in the inflation outlook from its interim targets, and reiterated its aim of creating the monetary and financial conditions needed to reach the 5 per cent medium-term inflation target.