Turkiye cuts benchmark rate to 37%, flags confidence on inflation

23 Jan '26

1 min read

Turkiye cuts benchmark rate to 37%, flags confidence on inflation

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Insights

Turkiye's central bank has cut its policy rate by 100 bps, lowering the one-week repo rate to 37 per cent.
While underlying inflation eased in December, January indicators show firmer consumer prices.
Demand conditions continue to support disinflation at a slower pace.
The bank reiterated its commitment to a tight, data-driven stance to achieve the 5 per cent inflation target.

Turkiye’s central bank has cut its benchmark policy rate by 100 basis points (bps), signalling growing confidence in the disinflation process despite lingering price risks. The Monetary Policy Committee (MPC), chaired by Governor Yasar Fatih Karahan, reduced the one-week repo auction rate from 38 per cent to 37 per cent. The overnight lending rate was lowered from 41 per cent to 40 per cent, while the overnight borrowing rate was cut from 36.5 per cent to 35.5 per cent.

The MPC said the underlying trend of inflation declined in December. While leading indicators point to firmer monthly consumer inflation in January, the rise in underlying inflation remains limited. Demand conditions in the last quarter continue to support disinflation, though at a slower pace, the Central Bank of the Republic of Turkiye said in a press release.

The committee cautioned that inflation expectations and pricing behaviour still pose risks and reiterated that a tight monetary stance will be maintained until price stability is achieved. It added that policy decisions will remain data-driven and aimed at reaching the 5 per cent inflation target in the medium term, added the release.

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