The Central Bank of the Republic of Türkiye (CBRT) cut its policy rate by 100 basis points to 36% after its Monetary Policy Committee meeting. It was the first cut in nine months. The bank lowered the overnight lending rate from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%.
The move follows a cut in January 2026, when the policy rate fell from 38% to 37%. Rate reductions were then halted from February 28, after the US-Israel and Iran war broke out.
Inflation and the outlook
Inflation came in below expectations in recent months. Annual inflation was below 30% at the end of September. The bank said future rate decisions would be taken meeting by meeting and that it would be cautious.
The CBRT said it would keep a tight monetary policy stance. It also warned that upside risks to inflation from energy prices remain because of geopolitical tensions.
Global rate expectations and domestic data
Global markets have seen expectations of rate hikes strengthen in the United States, Europe and Japan. That backdrop makes Turkey’s easing stand out among major economies.
Consumer confidence fell to 84.8 in October, a nine-month low, after 91.9 in September. The index dropped 7.7% on the month. In August, the foreign trade deficit on a balance-of-payments basis was $3.75 billion, while the 12-month rolling current account deficit stood at $42.1 billion.
Net portfolio investment recorded an outflow of $1.03 billion in August. Official reserves rose by a net $7.14 billion over the same month.
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