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Central Bank of the Republic of Türkiye (CBRT) swept ₺2.26 trillion ($55 billion) from the financial system ahead of Thursday’s critical interest rate decision amid growing expectations that policymakers may resume rate cuts following a prolonged tightening cycle.
According to the CBRT’s daily net funding data, the bank has been consistently withdrawing liquidity from the market since July 11, reversing the injection stance that had continued for four months since March.
The average cost of funding rate did not change, held steady at the policy rate of 46%.
The move appears aimed at containing inflationary expectations and supporting the Turkish lira ahead of a potential pivot in monetary policy.
The Turkish central bank is expected to lower the policy rate by at least 250 basis points, according to July’s Survey of Market Participants. The year-end policy rate is projected at 36.16%, while the 12-month outlook drops further to 28.25%, reflecting expectations of an extended easing cycle.
However, inflationary pressures remain elevated despite June’s better-than-expected figure of 35.05%, as persistent price rigidity in core consumer expenditure groups continues to weigh on disinflation.
The Turkish central bank had stopped withdrawing liquidity consecutively in April, as conditions tightened again following a market rout triggered by escalating political tensions over a corruption probe targeting then-Istanbul Mayor Ekrem Imamoglu and renewed global trade tensions sparked by U.S. President Donald Trump’s announcement of a 10% baseline tariff on all countries.
From April 7 to July 10, the bank supplied over ₺19.11 trillion ($773.09 billion) to the financial system and raised the one-week repo auction rate—also known as the policy rate—to 46%, the overnight lending rate to 49%, and the average cost of funding to as high as 49%.
The upcoming decision marks a critical juncture for Türkiye’s monetary policy, with markets closely watching how the CBRT balances its disinflation narrative against calls for looser financial conditions. The return to net liquidity withdrawal suggests that the bank is managing excess reserves cautiously without yet signaling a directional change through its funding rate.
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