The Central Bank of the Republic of Turkey lowered its one-week repo rate by 100 basis points to 37% on 22 January 2026, marking the fifth consecutive meeting at which the Monetary Policy Committee has voted to reduce borrowing costs. The decision fell short of market expectations, with many analysts and investors having positioned for a larger reduction of 150 basis points ahead of the announcement.
In its accompanying statement, the bank warned that inflation expectations still pose an upward threat to the disinflation process.
INFLATION AND RATE BACKGROUND
Annual inflation in Turkey peaked at more than 85 per cent in October 2022, its highest in about 24 years. The CBRT's disinflation programme, underpinned by a series of rate increases that began in mid-2023, began easing in December 2024 and, after a temporary tightening in spring 2025, resumed cuts in July 2025 as price pressures moderated. The bank has now cut rates at each of its last five meetings.
Inflation expectations among households and firms remain above the CBRT's medium-term targets.
FORWARD GUIDANCE
The committee did not provide explicit forward guidance on the size or timing of future reductions. The committee said the step size would be reviewed prudently on a meeting-by-meeting basis.