Turkey's central bank cuts policy rate to 36%

At its 22 October 2026 meeting, the Central Bank of the Republic of Turkey's Monetary Policy Committee cut the one-week repo rate by 100 basis points from 37% to 36%. It shifted the corridor by the same amount: the overnight lending rate fell from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%. Local media framed it as a return to the easing cycle after months.

Nineteen of 20 economists in an AA Finans survey expected a cut; Goldman Sachs had forecast a hold. The statement said activity data and the limited pass-through of supply shocks to domestic prices show weak domestic demand continuing, easing pressure on inflation.

The 100bp step is a measured move: economists read it as waiting to confirm that disinflation is lasting, since a larger cut could have unsettled the lira and expectations.

Before the decision Borsa Istanbul was volatile: the BIST 100 rose 3.06% to 11,779.96 on 20 October and fell 1.87% to 11,577.12 on 21 October, with the dollar at about 49.6 lira. Rate cuts generally support equities and lower deposit returns, depending on the inflation outlook.

The policy rate is the one-week rate at which the central bank lends to banks and steers loan and deposit rates. The rate corridor is the band between the overnight lending and borrowing rates. A basis point is one hundredth of a percentage point.

Cuts usually reach loan rates with a lag of a few weeks, and banks may lower deposit rates faster than lending rates.

The year's last Inflation Report is due on Thursday 12 November and will update inflation forecasts for year-end and 2027. October inflation data in early November will shape the next decision on 10 December.

• Ask your bank for updated loan offers; commercial rates should follow with a lag.
• Plan cash management for lower deposit returns.
• Revisit big investment financing after the 12 November report.