Turkey central bank held rate at 37% amid slowing growth and easing inflation
The bank kept its one-week repo rate unchanged for a fifth straight meeting on September 10, citing weaker domestic demand and decelerating underlying inflation.
Published
The Central Bank of the Republic of Turkey held its benchmark one-week repo rate at 37% for a fifth consecutive decision at its September 10 meeting, according to Trading Economics. The overnight lending rate stayed at 40% and the overnight borrowing rate at 35.5%, Turkish Minute reported.
At that meeting, the bank said recent data pointed to a decline in underlying inflation and confirmed continued weakness in domestic demand, while warning that high energy prices tied to geopolitical developments posed an increased risk to the inflation outlook, Turkish Minute reported, citing Anadolu news agency. Trading Economics said surging energy prices linked to the escalation of the Iran-US war have heightened inflationary risks in Turkey and kept financial conditions from easing.
Annual consumer inflation eased to 32.11% in June from 32.61% in May, according to TurkStat figures cited by Turkish Minute. In July, the bank raised its interim inflation target for the end of 2026 to 24% from 16%, and said it expected inflation to end the year at 26%, Turkish Minute reported. The bank began cutting rates in late 2024 after holding near 50% to contain an inflation surge that peaked above 75% in May 2024, and lowered the rate from 38% to 37% in January before pausing, per Turkish Minute.
Slowing demand and decelerating underlying inflation support the disinflation path, but persistent services inflation and elevated inflation expectations are keeping the central bank cautious on the pace of easing. That balance leaves policy expectations largely unchanged, with the bank unlikely to accelerate rate cuts despite the softer growth and demand readings.