Turkey Central Bank Slows Rate Easing Cycle With 100 Basis Point Reduction
Turkey's central bank lowered its repo rate to 37 percent amid inflation concerns. This fifth consecutive cut was smaller than the market had anticipated.
Insights:
Turkey's Central Bank lowered its one-week repo rate by 100 basis points to 37% on January 22, 2026. This decision, made during the first policy meeting of the year in Turkey 
TR, marks the fifth consecutive easing move since the summer of 2025. However, the reduction was smaller than the median market expectation of a 150 basis point cut, which would have matched the size of the December reduction.
TR, marks the fifth consecutive easing move since the summer of 2025. However, the reduction was smaller than the median market expectation of a 150 basis point cut, which would have matched the size of the December reduction.The central bank cited firming inflation expectations and pricing behavior as primary reasons for the smaller cut, noting these factors threaten the ongoing disinflation process. While consumer prices in Turkeyrose 30.9% year-on-year in December with a monthly increase of 0.89%, leading indicators suggest consumer inflation firmed in January, primarily driven by food prices. December readings were actually below expectations, aided by easing food prices at the time, but the central bank remains cautious about new-year price updates.
