Türkiye’s Central Bank keeps policy rate at 37 percent

ANKARA

Turkish Central Bank has kept the policy rate steady at 37 percent in line with market expectations, saying that tight monetary policy stance will strengthen disinflation process.

The bank’s Monetary Policy Committee (MPC) also decided to maintain 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, the bank said in a statement, accompanying its rate decision on Sept. 10.

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, it added.

Monetary policy decisions are made prudently on a meeting-by-meeting basis with a focus on the inflation outlook, it said.

In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened, according to the statement.

The committee reiterated that it remains highly attentive to upside risks on inflation.

Despite monthly fluctuations, recent inflation figures and leading indicators suggest that the underlying trend of inflation is decelerating, said the bank.

Data on economic activity as well as the limited pass-through of supply shocks to domestic prices confirm the weakness in domestic demand, it added.

“On the other hand, elevated energy prices amid geopolitical developments pose an upward risk to the inflation outlook. The impact of geopolitical developments on the inflation outlook through the cost channel, economic activity and expectations is closely monitored,” said the bank.

Under the new Medium-Term Program (OVP) targets, released on Sept. 6 covering 2027-2029, annual consumer inflation is projected to reach 28.4 percent by the end of 2026, before declining to 21 percent in 2027, 13.5 percent in 2028 and 9 percent by the end of 2029, returning to single-digit levels.

The next MPC meetings are scheduled for Oct. 22 and Dec. 10.