2025.10.2311:06:49UTC+00Turkey Cuts Policy Rate at 39.5% as Expected

In October 2025, the Central Bank of Turkey reduced its key one-week repo rate by 100 basis points to 39.5%, in an anticipated move. The overnight lending rate was adjusted to 42.5%, while the borrowing rate was set at 38%. Although the demand conditions are creating disinflationary pressures, recent data suggests a deceleration in the rate of disinflation, compounded by increasing risks from food prices. The Bank reiterated its commitment to maintaining a tight monetary policy until price stability is achieved. It was emphasized that monetary policy decisions will be informed by actual and projected inflation as well as its underlying trend. The Committee plans to adjust interest rates prudently, assessing each move in light of inflation dynamics, and is prepared to implement further tightening if inflation strays from interim targets. Additionally, the Bank indicated the possibility of introducing macroprudential measures to bolster monetary transmission if necessary. Liquidity conditions will be meticulously managed, with the ultimate aim of reaching a 5% medium-term inflation target, using a transparent and data-driven strategy.