Breaking News: Central Bank announces October interest rate decision!

The Central Bank of the Republic of Türkiye (CBRT) Monetary Policy Committee (MPC) met under the chairmanship of Fatih Karahan.

The interest rate decision was announced following the critical meeting that the markets had their eyes and ears on.

100 BASIS POINT CUT FROM THE CENTRAL BANK

The Committee lowered the policy rate from 40.5 percent to 39.5 percent.

The Central Bank's statement is as follows:

The Monetary Policy Committee (the Committee) has decided to reduce the one-week repo auction rate, which is the policy rate, from 40.5 percent to 39.5 percent. The Committee also reduced the Central Bank's overnight lending rate from 43.5 percent to 42.5 percent, and the overnight borrowing rate from 39 percent to 38 percent.

The underlying trend of inflation increased in September. Recent data indicate that demand conditions are at a disinflationary level, but the disinflation process has slowed down. Risks to the disinflation process, stemming from recent price developments, particularly in food, have become more pronounced through inflation expectations and pricing behavior.

The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels. The Committee will determine the steps to be taken regarding the policy rate in a manner consistent with intermediate targets, taking into account inflation realizations, the underlying trend, and expectations, to ensure the tightness required for disinflation. The magnitude of the steps is being reviewed with a cautious, meeting-based approach focused on the inflation outlook. In the event of a significant divergence of the inflation outlook from the intermediate targets, the monetary policy stance will be tightened.

If developments in credit and deposit markets occur outside of what is anticipated, the monetary transmission mechanism will be supported by additional macroprudential steps. Liquidity conditions will continue to be closely monitored, and liquidity management tools will continue to be used effectively.

The Committee will determine its policy decisions in a way that will provide the monetary and financial conditions necessary to reach the 5 percent inflation target in the medium term. The Committee will take its decisions within a predictable, data-driven, and transparent framework.

WHAT WERE THE MARKETS EXPECTING?

Market analysts had expressed the view that the Central Bank could make a cut in the interest rate of between 100 and 250 basis points.

NO MEETING IN NOVEMBER

The Central Bank will not hold a meeting for an interest rate decision in November. The date for the next meeting has been set for December 11, 2025, on the calendar.