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Turkey’s central bank (CBRT) held its key interest rate at 46.00% in line with market expectations, while surprising some by maintaining a hawkish stance on the upper bound of its rate corridor.
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The decision reflects the CBRT’s commitment to controlling inflation, even as economic growth shows signs of slowing.
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Markets reacted with a weaker Turkish Lira, as investors reassessed the outlook for future rate cuts.
Turkey’s central bank (CBRT) kept its benchmark One-Week Repo Rate unchanged at 46.00% on Thursday, in line with market expectations. However, the decision to maintain the top of the rate corridor—the Overnight Lending Rate—at 49.00% surprised some analysts who had anticipated a more dovish shift. Meanwhile, the Overnight Borrowing Rate remained steady at 44.50%, as forecast.
In its policy statement, the CBRT reiterated that while inflation is expected to decline gradually, economic growth is also likely to lose momentum. By keeping rates elevated, the central bank extended its pause in policy adjustments, potentially paving the way for rate cuts later in the summer.
The Monetary Policy Committee emphasized its commitment to maintaining a tight stance until price stability is achieved through a sustained disinflation trend. The CBRT also reaffirmed its data-driven approach, stating it would evaluate policy rate decisions on a meeting-by-meeting basis, with inflation forecasts remaining the primary guide.
Market Reaction
The Turkish Lira (TRY) weakened slightly following the announcement, with USD/TRY climbing to a multi-month high near 39.5500—its strongest level since mid-March—as markets digested the CBRT’s cautious tone.
