Türkiye's Central Bank Reduces Policy Rate to 36 Percent

The rate reduction was anticipated, particularly after September's consumer inflation data showed an annual rate of 29.73 percent, which was below the market expectation of 30.3 percent. This marks the first instance of inflation falling below 30 percent since November 2021, with consumer prices increasing by 1.84 percent on a month-to-month basis.

In addition to the key interest rate cut, the Central Bank also adjusted the overnight lending rate from 40 percent to 39 percent and the overnight borrowing rate from 35.5 percent to 34.5 percent.

The Central Bank indicated that despite some monthly inflation fluctuations, recent trends confirm a slowdown in underlying inflation pressures. It noted that weak domestic demand, alongside limited effects from supply shocks on prices, continues to characterize the economic landscape.

The bank also expressed concern over the impact of high energy prices due to ongoing geopolitical tensions, which pose risks to the inflation outlook. It emphasized that it will closely monitor the effects of these geopolitical developments on inflation and economic activity.

The bank reaffirmed its commitment to a tight monetary policy stance to enhance the disinflation process via demand, exchange rates, and expectations. The MPC noted that future rate decisions will be based on both actual and anticipated inflation, as well as its trends, to ensure necessary monetary tightness aligned with disinflation targets.

The next MPC meeting is scheduled for December 10, 2026. The bank stated that if inflation deteriorates significantly and persistently, it would adjust its monetary policy accordingly to meet the medium-term inflation target of 5 percent.