Turkey: Central Bank leaves rates unchanged in July
TCMB stands pat for fourth meeting in a row: At its meeting on 23 July, the Central Bank of the Republic of Turkey (TCMB) kept its one-week repo rate unchanged at 37.00% for a fourth 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.
Inflation risks and geopolitical uncertainty drive hold: The TCMB held rates amid high inflation and elevated geopolitical uncertainty. The Bank avoided resuming cuts, citing inflation risks: Although inflation declined slightly in June, it is set to rise temporarily in July, partly due to renewed upward pressure on energy prices—on 23 July, Brent oil prices reached USD 100 per barrel for the first time since late-May. At the same time, recent data pointed to an ongoing weakening in domestic demand, effectively ruling out a hike.
Easing cycle expected to resume later this year: Although the Bank did not provide specific guidance on future repo rate changes, it noted that it will maintain a tight monetary stance until price stability is achieved. A majority of our panelists expect the TCMB to resume its easing cycle as soon as its next meeting on 10 September. However, the spread among panelists’ forecasts for the end of 2026 is large, reflecting uncertainty over the inflation outlook.
Panelist insight: ING’s Muhammet Mercan said:
“Overall, all policy options continue to be available for the TCMB. This approach signals a clear intention to preserve flexibility in policymaking depending on changing geopolitical conditions. In the near term, we expect the TCMB to remain in wait-and-see mode before deciding whether to lower the effective cost of funding towards the policy rate. A renewed agreement in the U.S.–Iran conflict could create scope for the Bank to normalize the effective funding rate as early as August or September, depending on developments in inflation and reserve dynamics.”