Turkish Central Bank Cuts Benchmark Interest Rate to 37 Percent Amidst Easing Cycle

Central Bank Continues Gradual Easing

The Central Bank of the Republic of Türkiye (CBRT) announced on Thursday, January 22, 2026, a reduction of its benchmark interest rate by 100 basis points, bringing the one-week repo rate down to 37 percent from 38 percent. This move signifies a continuation of the central bank's gradual easing cycle, which has seen several reductions since the summer of the previous year.

The decision was made by the Monetary Policy Committee (MPC) at its first rate-setting meeting of 2026. While the cut aligns with the ongoing easing, it was a smaller reduction than the 150 basis points many economists had anticipated.

Inflation Trends and Economic Outlook

In its accompanying statement, the CBRT indicated that the underlying trend of inflation continues to ease, despite acknowledging short-term pressures. Leading indicators suggested a rise in monthly consumer inflation for January, primarily attributed to food prices. However, the underlying inflation trend, excluding volatile components, reportedly declined in December.

The bank also noted that domestic demand conditions 'continue to support the disinflation process, albeit at a moderating pace'. Despite these positive signs, the MPC highlighted that 'inflation expectations and pricing behavior, while showing signs of improvement, continue to pose risks to the disinflation process'.

Commitment to Price Stability

The CBRT reiterated its commitment to maintaining a restrictive monetary policy stance until price stability is achieved. The bank's ultimate goal is to reach a 5 percent inflation target in the medium term. The committee stated that it would determine the policy rate by considering 'realized and expected inflation and its underlying trend' to ensure the tightness required for the projected disinflation path.

This latest reduction marks the fifth such move since last summer, following a period where the central bank had aggressively raised rates from 8.5 percent in May 2023 to 50 percent by March 2024 to combat soaring inflation. Annual inflation in Turkey eased to a 49-month low of 30.89 percent in December 2025, down from 31.07 percent in November.

Previous Rate Adjustments in the Easing Cycle

• December 2025: Rate cut by 150 basis points to 38 percent.
• October 2025: Rate cut by 100 basis points to 39.5 percent.
• August 2025: Rate cut by 250 basis points to 40.5 percent.