Turkish Central Bank Keeps Policy Rate Unchanged Again

At its meeting on April 22, the MPC also maintained the Central Bank overnight lending rate and the overnight borrowing rate at 40 percent and 35.5 percent, respectively.

The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate and expectation channels, said the bank in a statement accompanying the rate decision.

In case of a significant and persistent deterioration in the inflation outlook, which can also be driven by the recent developments, monetary policy stance will be tightened, it added.

The bank reiterated that it remains highly attentive to upside risks of inflation.

“In case of unanticipated developments in credit and deposit markets, monetary transmission mechanism will be supported via additional macroprudential measures,” it stressed. 

“The committee will determine the policy rate by taking into account realized and expected inflation and its underlying trend in a way to ensure the tightness required by the projected disinflation path in line with the interim targets,” the statement added.

Leading indicators suggest a slight increase in the underlying trend in April, the bank said, noting that amid geopolitical developments and the resulting uncertainties, energy prices remain elevated and exhibit notable volatility.

The annual inflation rate in Turkey slowed from 31.53 percent in February to 30.87 percent in March, with monthly inflation easing from 2.96 percent to 1.94 percent.

The effects of these developments and domestic energy prices on the inflation outlook through the cost channel and economic activity are being closely monitored, the statement added.

While indicators point to a slowdown in economic activity, potential second-round effects of recent developments on the inflation outlook will be of importance, said the bank.

“The committee will make its policy decisions so as to create the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term,” it reiterated.

From May 2023 to March 2025, the Central Bank raised its policy rate from 8.5 percent to 50 percent before holding it steady until December 2024, when it cut rates by 250 basis points to 47.5 percent.

Further easing followed in August, with a 250-basis-point cut to 40.5 percent, and again in October with a 100-basis-point reduction to 39.5 percent.

At its December meeting, the Central Bank lowered the policy rate by 150 basis points to 38 percent.

The bank slashed the rate to 37 percent in January, at the first monetary policy meeting of 2026.