The Turkish central bank’s monetary policy committee (MPC) on September 10 left its main policy rate (one-week repo) unchanged at 37% for a fifth consecutive meeting in line with expectations. The regulator has not changed the benchmark since January. It also left its overnight lending rate unchanged at 40%.

The impact of geopolitical developments on the inflation outlook through the cost channel, economic activity and expectations would stay under close scrutiny, the MPC said in a statement that accompanied the rates announcement.

The MPC’s final two rate-setting meetings of the year are scheduled for October 22 and December 10. A cut of 100 bp at each meeting is on the cards.

On August 23, the central bank resumed its one-week repo auctions. The authority’s weighted average cost of funding and market rates (TLREF) currently remains at 37%.

End-2026 inflation forecasts break through 30% level

On August 13, the central bank raised its end-2026 official inflation "forecast" to 28% in its latest quarterly inflation report. It was pushed up from the 26% that it announced in May.

On September 6, the end-2026 official inflation target was hiked to 28.4% in the government’s latest medium-term programme (OVP). The target was stated as 16% in last year's assessment.

Even prior to the February 28 US/Israeli attack on Iran that ignited the ongoing Middle East conflict, the inflation realisation in Turkey was expected to come in at above the 20%-level at end-2026. Since then, financial institutions’ forecasts have broken through the 30%-level in response to the course taken by oil prices.

Since April and through to August, Turkey’s statistical institute (TUIK, or TurkStat) has released official annual inflation at 32% (with the rounding of decimals). Since July 2025, the figure has been released at between 30.65% and 33.52%.

On November 12, the central bank will publish its next quarterly inflation report, the fourth and last of 2026. It will include updated forecasts.