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The Central Bank of the Republic of Türkiye (CBRT) kept its policy rate unchanged at 37% on Thursday, citing "weakening domestic demand alongside renewed upward pressure on energy prices tied to geopolitical developments."
The Monetary Policy Committee—chaired by Governor Fatih Karahan alongside members Hatice Karahan, Fatma Ozkul, Gazi Ishak Kara, Yusuf Emre Akgunduz and Elif Haykir Hobikoglu—decided to hold the policy rate, the one-week repo auction rate, at 37%.
The committee also kept the overnight lending rate at 40% and the overnight borrowing rate at 35.5%.
The committee said in a statement that the underlying trend of inflation decreased slightly in June, but that leading indicators suggest it will rise temporarily in July.
It said that amid growing uncertainty stemming from geopolitical developments, energy prices have started trending upward again, while recent data confirm continued weakening in domestic demand.
The committee said it is closely monitoring the impact of geopolitical developments on the inflation outlook through cost, economic activity and expectations channels.
The committee said its tight monetary policy stance will be maintained until price stability is achieved, and is intended to strengthen the disinflation process through demand, exchange rate and expectations channels.
It said the policy rate will be set by taking into account realized and expected inflation and its underlying trend, in a way that ensures the tightness required by the projected disinflation path in line with interim targets.
The committee stated that monetary policy decisions will continue to be made prudently on a meeting-by-meeting basis with a focus on the inflation outlook. It added that the policy stance would be tightened in the event of a significant and persistent deterioration in the inflation outlook.
The committee reiterated that it remains "highly attentive" to upside risks to inflation.
The committee said that in the event of unanticipated developments in credit and deposit markets, the monetary transmission mechanism would be supported through additional macroprudential measures, and that liquidity conditions will continue to be closely monitored, with liquidity management tools used effectively.
The committee said it will continue to make policy decisions aimed at creating the monetary and financial conditions necessary to reach the 5% medium-term inflation target, within a predictable, data-driven and transparent framework.
A summary of the meeting is to be released within five working days.
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