Türkiye's central bank on Thursday cut its benchmark policy rate by 100 basis points to 36%, in line with market expectations. The decision follows five consecutive meetings at which the bank held rates steady.
In its statement, the Monetary Policy Committee said recent inflation figures and leading indicators confirm a slowdown in the underlying inflation trend, despite monthly fluctuations. It added that economic activity data and the limited pass-through of supply shocks to domestic prices indicate that domestic demand remains weak.
HOW THE RATE CORRIDOR MOVED
The committee, chaired 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%.
The members taking part in the meeting were Yaşar Fatih Karahan (Governor), Hatice Karahan, Fatma Özkul, Gazi İshak Kara, Yusuf Emre Akgündüz and Elif Haykır Hobikoğlu.
ENERGY PRICES REMAIN AN UPSIDE RISK
The committee said elevated energy prices stemming from ongoing geopolitical tensions continue to pose an upside risk to the inflation outlook. It reiterated its attention to upside inflation risks.
In case of a significant and persistent deterioration in the inflation outlook, the committee said, the monetary policy stance will be tightened. The bank said the tight stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate and expectation channels.
POLICY FRAMEWORK AND NEXT STEPS
The size and timing of policy steps will be determined prudently on a meeting-by-meeting basis, with a focus on the inflation outlook. 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.
The committee said it will make its decisions in a predictable, data-driven and transparent framework, creating the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term. The summary of the Monetary Policy Committee meeting will be released within five working days.
BACKGROUND TO THE EASING
Türkiye's orthodox tightening drive began in mid-2023. The central bank later cut its key interest rate by 250 basis points to 47.5% in December 2024, and annual consumer inflation ended 2024 at 44.38%.
The central bank held its key policy rate unchanged for a fifth straight decision in September, as expected. The lira weakened to a record low of 48.5 per US dollar in September as the central bank intervened in foreign exchange markets, and USD/TRY reached an all-time high of 49.36 in October 2026.