Turkey Economics: CBT holds rates and turns more cautious on near-term inflation

Research evidence excerpt

Turkey Economics: CBT holds rates and turns more cautious on near-term inflation

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23 Jul 2026 08:01:30 ET │ 9 pages

Turkey Economics

CBT holds rates and turns more cautious on near-term inflation

CITI'S TAKE

As was widely expected, the CBT held its policy rate unchanged at 37% in

the July MPC meeting. Compared with the June statement, the current one

strikes a somewhat more cautious tone on the near-term inflation

outlook. While noting that underlying inflation eased in June, the CBT Ilker DomacAC

highlights that leading indicators point to a temporary re-acceleration in +971-4509-9588

July. The MPC also upgraded its assessment of energy price risks, noting ilker.domac@citi.com

that prices have started trending higher again amid heightened

Gultekin IsiklarAC geopolitical uncertainty, compared with its previous assessment that

energy prices remained volatile and elevated. Concurrently, the CBT +90-212-319-4915

gultekin.isiklar@citi.com acknowledges that recent data confirm an ongoing weakening in

domestic demand. Overall, the July statement suggests a more

challenging inflation outlook, with the MPC maintaining its tightening bias

and reiterating its commitment to keeping policy sufficiently restrictive

until price stability is achieved.

In our view, price developments point to a more challenging inflation outlook than

envisaged in the latest IR. The broader economic fallout from the Middle East

conflict has prompted the CBT not only to raise its interim targets, but also to signal

that policy would remain tighter for longer than envisaged in the previous

IR. Despite acknowledging the deterioration in the inflation outlook, the CBT has so

far remained reluctant to align its policy rate (37%) with the average funding rate

(40%).