Turkey Holds Interest Rate at 37%, Pausing Nine-Month Easing Cycle

In its statement, the bank said the Monetary Policy Committee (MPC) decided to keep the one-week repo auction rate, the bank’s main policy rate, at 37%. The committee also maintained the overnight lending rate at 40% and the overnight borrowing rate at 35.5%.

Energy prices rise amid geopolitical uncertainty

According to the statement, the underlying trend of inflation remained broadly flat in February. However, the bank noted that geopolitical developments have increased uncertainties, leading to a deterioration in global risk appetite and rising energy prices.

Authorities said supportive decisions for tight monetary policy, along with coordinated fiscal measures, have been implemented to limit risks these factors may pose to the inflation outlook. The bank added that it is closely monitoring the impact of geopolitical developments on inflation through cost channels and economic activity.

Tight policy stance to remain until price stability

The CBRT reiterated that a tight monetary policy stance will be maintained until price stability is achieved, stating that this approach will strengthen the disinflation process through demand, exchange rate, and expectations channels.

The committee said future steps on the policy rate will be determined in line with inflation developments, underlying trends, and expectations, ensuring the level of tightness required for disinflation in line with interim targets.

Monetary policy decisions will continue to be taken on a meeting-by-meeting basis, with a cautious and inflation-focused approach, the statement said. The bank also warned that monetary policy could be tightened further if the inflation outlook deteriorates significantly and persistently.

Additional measures possible if needed

The CBRT added that if developments in credit and deposit markets deviate from expectations, the monetary transmission mechanism will be supported with additional macroprudential measures.

Liquidity conditions will continue to be monitored closely, and liquidity management tools will be used effectively, the bank said.

The committee emphasized that policy decisions will aim to create the monetary and financial conditions necessary to bring inflation down to the medium-term target of 5%, adding that decisions will be taken within a predictable, data-driven, and transparent framework.

Source: The Central Bank of the Republic of Türkiye