Central Bank set to meet for rate decision this week

ISTANBUL

The Central Bank of Türkiye’s Monetary Policy Committee (MPC) will meet this week for the third time this year to decide on the key interest rate, amid challenges facing both the domestic and global economy due to the Middle East conflict.

Economists participating in AA Finans’s expectations survey anticipate that the Central Bank will keep its policy interest rate unchanged at 37 percent at the MPC meeting scheduled for April 22.

The survey, conducted ahead of the rate-setting meeting, gathered responses from 37 economists.

Of the participants, 22 economists forecast that the policy rate will be left unchanged, while one economist expects a 100‑basis‑point hike and 14 economists predict a 300‑basis‑point increase.

The median expectation for the April MPC decision points to the policy rate being held steady at 37 percent.

Meanwhile, the median year‑end policy rate forecast among respondents was calculated at 33 percent.

During a recent presentation in New York, Central Bank Governor Fatih Karahan noted that disinflation continued across all sub-groups, albeit at different rates.

The annual inflation rate in Türkiye 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.

“Lower inertia in rent and education supported the overall disinflation. We expect this support to continue this year,” said Karahan, adding that the sliding scale mechanism (Eşel mobil) limits inflationary pressures.

Central Bank is pivoting its focus towards managing expectations and exchange rates to ensure price stability amid the economic fallout from the Middle East conflict, said Central Bank Deputy Governor Hatice Karahan, speaking at the Institute of International Finance (IIF) Global Outlook Forum in Washington, D.C., last week.

The Central Bank kept its policy interest rate, or one-week repo rate, constant at 37 percent in March.

The bank has also maintained the overnight lending rate and the overnight borrowing rate at 40 percent and 35.5 percent, respectively.

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.