Türkiye’s central bank cut its main interest rate by one percentage point to 36% on Thursday, which daily Akşam described as its first reduction in nine months, as policymakers said recent data confirmed that underlying inflation is easing.
The Monetary Policy Committee (MPC) of the Central Bank of the Republic of Türkiye (TCMB) lowered the one-week repo auction rate, its policy rate, from 37% to 36%, according to the bank’s press release published at 14:00 Istanbul time. It also cut the overnight lending rate from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%, keeping the corridor around the policy rate unchanged.
The 100-basis-point cut matched market expectations. In a survey of 20 economists by AA Finans before the meeting, 19 forecast a cut of exactly that size and one expected 200 basis points. The bank had held the rate at 37% at its September meeting, citing high energy prices. Its own October survey of market participants had pointed to further easing towards year-end.
What the central bank said
In its statement, the committee said recent inflation readings and leading indicators confirm a decline in the underlying trend, despite month-to-month fluctuations. It pointed to continued weak domestic demand and said supply shocks had passed through to domestic prices only to a limited extent.
The bank warned, however, that energy prices, kept high by ongoing geopolitical tensions, remain an upside risk to inflation. It said it would keep a tight policy stance until price stability is achieved, take decisions meeting by meeting and in a cautious way consistent with its interim targets, and tighten again if the inflation outlook deteriorates significantly and persistently.
The committee repeated its medium-term inflation target of 5%. It added that if credit or deposit markets develop differently than expected, it would support the transmission of monetary policy with additional macroprudential measures. A summary of the meeting will be published within five business days.
The decision follows signals from Governor Yaşar Fatih Karahan that the bank would stay cautious; he recently stressed tight policy and a preference for the lira.
What it means for foreigners
For foreign residents and investors, the cut is a modest step rather than a turn in policy. Turkish lira deposit rates, which closely track the policy rate, may edge lower in the coming weeks, slightly reducing the returns that have made lira savings accounts attractive to some expatriates. The bank has not commented on the exchange rate, and the lira’s direction will depend on how markets judge the pace of further cuts.
Housing loans in Türkiye remain expensive, and a one-point move is unlikely to change the picture quickly for buyers, many of whom – especially foreigners, who generally cannot obtain Turkish mortgages easily – pay in cash. Property agents nonetheless watch rate cuts closely, as cheaper credit could support demand in a market where house prices have been rising more slowly than inflation. Anyone planning a purchase can find the basics in our guide to buying property in Turkey as a foreigner.
Economists in the AA Finans survey expected the policy rate to end the year at 35%, implying one more cut at the bank’s final meeting of 2026.
Sources
- Faiz Oranlarına İlişkin Basın Duyurusu (2026-45) (TCMB)
- Merkez Bankası kararını açıkladı: 9 ay sonra ilk faiz indirimi (Akşam)
- Merkez Bankası faiz kararını açıkladı (NTV)
- Merkez Bankası faiz kararı bugün açıklanıyor: İndirim beklentisi yüzde 36 (Habermeydan)
Photo: Türkiye Cumhuriyet Merkez Bankası / Public domain, via Wikimedia Commons
