Turkey: Central Bank leaves rates unchanged in June
TCMB stands pat for third meeting in a row: At its meeting on 11 June, the Central Bank of the Republic of Turkey (TCMB) kept its 1-week repo rate on hold at 37.00% for a third consecutive meeting, following a total of 900 basis points of cuts from June 2025 to January 2026. The decision was in line with market expectations.
Elevated inflation and geopolitical uncertainty drive hold: The TCMB held rates as it continues to assess the impact of its aggressive easing cycle against a backdrop of still-elevated inflation, with the Bank noting that the underlying trend of inflation declined slightly in May after rising in April due to the Iran energy price shock. In addition, geopolitical uncertainty and volatile energy prices add meaningful upside risks to Turkey’s inflation path, reinforcing the case for a pause. At the same time, Q1 GDP growth data and leading indicators pointed to slowing economic activity and weak domestic demand, supporting the decision to pause, rather than tighten, monetary policy.
Easing cycle expected to resume later this year: A majority of our panelists expect the TCMB to resume its easing cycle later this year. The spread among panelists’ forecasts for the end of 2026 is large, though, reflecting uncertainty over the outlook for inflation.
The Central Bank reconvenes on 23 July.
Panelist insight: ING’s Muhammet Mercan said:
“In the near term, we think the CBT will remain in a wait-and-see mode before deciding whether to reduce the effective cost of funding back towards the policy rate. A deal in the US-Iran conflict in the summer will likely create room for the bank to normalise the effective funding rate depending on inflation and reserve dynamics.”