Turkish Central Bank keeps rates high as geopolitical risks threaten inflation

By News Centre

The Turkish Central Bank has held its policy rate steady at 37% for a fourth consecutive meeting, keeping monetary policy tight as it monitors inflation and geopolitical risks. The decision, widely expected by markets, maintains the rate at its current level following a 100-basis-point cut in January that brought it down from 38%.

The bank said the underlying trend of inflation decreased slightly in June, while recent data confirmed ongoing weakening in domestic demand. However, leading indicators suggest the underlying inflation trend will temporarily rise in July, with energy prices resuming an upward trend due to growing uncertainty around geopolitical developments.

The committee said it remains highly attentive to upside inflation risks and would tighten monetary policy if there is a significant and persistent deterioration in the inflation outlook. The overnight lending rate was maintained at 40% and the overnight borrowing rate at 35.5%. The bank said it would continue using macroprudential measures and liquidity-management tools to support monetary transmission.