Eyes on rate decision following August inflation data

ISTANBUL

Following the release of August inflation data, most economists expect Türkiye’s Central Bank to keep its policy rate unchanged at 37 percent.

The bank’s rate-setting meeting is scheduled for Sept. 10.

Türkiye’s annual consumer inflation eased from 31.75 percent in July to 31.51 percent in August. Consumer prices rose 1.84 percent month-on-month in August, accelerating from a 1.78 percent increase in July.

The Central Bank recently resumed its one-week repo auctions, which had been suspended since March 1, 2026.

“Following the Central Bank’s faster-than-expected normalization in funding and today’s print, we now expect a 100 basis-point policy rate cut in October (versus December), bringing the rate to 36 percent, where we still expect a hold through year-end,” BBVA Research said in a note.

Citi does not expect any change in the policy rate at the Monetary Policy Committee meeting in September.

The bank also believes there is very limited room for rate cuts in the second half of the year and forecasts that the policy rate will end 2026 at 35 percent.

“We expect the Central Bank to keep the policy rate unchanged...in September. Rate cuts of 50 to 100 basis points could be seen at the October and December meetings. Accordingly, the year-end policy rate could be in the 35 to 36 percent range,” said Gedik Yatırım, a brokerage house.

Brokerage firm Şeker Yatırım said it expects the Central Bank to first complete the normalization process and then begin cautious rate cuts without compromising its tight monetary stance.

“The return to repo auctions as part of the normalization process and the resumption of funding through the policy rate can be viewed as an implicit rate cut. We expect this to be followed by reductions in the policy rate after September. Under our base-case scenario, we expect the the Central Bank to deliver a total of 400 basis points of rate cuts by the end of the year,” Şeker Yatırım said in a note.