Turkish Central Bank holds policy rate at 37% amid 'geopolitical energy risks'

The Central Bank of the Republic of Türkiye (CBRT) Monetary Policy Committee held its policy rate, the one-week repo auction rate, at 37% on Thursday, maintaining overnight lending and borrowing rates at 40% and 35.5%, respectively.

The bank cited geopolitically driven energy price volatility, continued weakening in domestic demand, and a slight improvement in the underlying inflation trend in May.

The committee said, "The underlying trend of inflation, which had risen in April in part due to higher energy prices following increases in the early months of the year, decreased slightly in May." However, it noted that "amid geopolitical developments and the resulting uncertainties, energy prices remain volatile and elevated."

An individual counts 200-lira banknotes at an office in Ankara, Türkiye. (Adobe Stock Photo)

Domestic demand weakening

The committee said first-quarter data pointed to a slowdown in economic activity, and that leading indicators suggested a continued weak course in domestic demand.

It said the impact of geopolitical developments on the inflation outlook, through cost channels, economic activity and expectations, is being closely monitored.

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Tightening remains on table

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

It said policy rate decisions would be made on a meeting-by-meeting basis with a focus on the inflation outlook.

"In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened," the statement said, adding, "the committee reiterates that it remains highly attentive to upside risks on inflation."

The committee also said it would make its decisions to create the monetary and financial conditions necessary to reach the 5% inflation target in the medium term in a "predictable, data-driven and transparent framework."

It further stated that additional macroprudential measures would be deployed if unanticipated developments emerged in credit and deposit markets.

June 11, 2026 02:24 PM GMT+03:00