Türkiye’s central bank holds policy rate at 37% for 4th consecutive meeting

The Turkish Central Bank on Thursday kept its policy rate unchanged at 37%, as the markets expected, extending its monetary policy pause for a fourth consecutive meeting.

The bank’s Monetary Policy Committee said the underlying trend of inflation decreased slightly in June, while recent data confirmed an ongoing weakening in domestic demand.

Leading indicators suggest the underlying inflation trend will temporarily rise in July, the bank said, adding that energy prices have resumed an upward trend because of growing uncertainty surrounding geopolitical developments.

In June, Türkiye’s annual consumer inflation eased to 32.11%, slightly below market expectations, as monthly price increases remained limited amid slower energy-linked pressure. The consumer price index (CPI) rose 0.99% on a monthly basis.

The bank said it is closely monitoring the effects of geopolitical developments on inflation through higher costs, economic activity and expectations.

The committee maintained the overnight lending rate at 40% and the overnight borrowing rate at 35.5%.

The bank said its tight monetary policy stance would be maintained until price stability is achieved, supporting the disinflation process through demand, exchange-rate and expectation channels.

Policy decisions will continue to be made prudently on a meeting-by-meeting basis, taking into account realized and expected inflation and its underlying trend, it added.

The committee reiterated that it remains highly attentive to upside inflation risks and said monetary policy would be tightened in the event of a significant and persistent deterioration in the inflation outlook.

The bank reduced its policy rate by 100 basis points from 38% to 37% in January. It subsequently held the rate unchanged at its meetings in March, April and June.

The January reduction followed cumulative cuts of 800 basis points during the second half of 2025, which brought the policy rate down from 46% to 38% by December.

The central bank said it would continue using macroprudential measures and liquidity-management tools when necessary to support monetary transmission.