Turkey’s central bank on Thursday kept its key interest rate unchanged at 37 percent, in line with market expectations, as it maintained a tight monetary policy stance amid continued inflation risks and uncertainty linked to the war in Iran, the state-run Anadolu news agency reported.
The central bank said its Monetary Policy Committee, chaired by Governor Fatih Karahan, decided to leave the one-week repo rate, its main policy rate, at 37 percent.
The bank also kept the overnight lending rate unchanged at 40 percent and the overnight borrowing rate at 35.5 percent.
Thursday’s decision means the central bank has kept the policy rate unchanged since January, when it cut the rate from 38 percent to 37 percent at the first Monetary Policy Committee meeting of the year.
The bank also left rates unchanged at its April 22 meeting, the third rate-setting meeting of 2026.
Economists had expected the bank to keep the policy rate unchanged. The median forecast for the policy rate at the end of the year stood at 35 percent.
In a statement after Thursday’s meeting, the central bank said the underlying trend of inflation, which had increased in April partly due to energy prices, eased somewhat in May.
Turkey’s annual inflation rate rose to 32.37 percent in April, up from 30.9 percent in March and above expectations, according to official data released by the Turkish Statistical Institute.
The annual rate slightly rose to 32.61 in May, while a Reuters poll of economists put the median year-end inflation estimate at 29 percent.
“Uncertainties related to geopolitical developments continue to cause volatility and high levels in energy prices,” the bank said.
Higher oil and gas prices linked to the US-Israeli war on Iran, which began on February 28, have increased inflation risks for energy-import-dependent Turkey by raising transport, heating and electricity costs and feeding into the price of goods and services.
Over the past year Turkey’s central bank has moved from aggressive tightening to gradual easing.
After raising its policy rate to around 50 percent in early 2024, the bank began cutting rates in mid-2025, reducing them step by step to 38 percent by the end of the year and then to 37 percent in January 2026.
Turkey has grappled with double-digit inflation since 2019, with annual inflation remaining above 30 percent for the past four years.
Inflation peaked above 75 percent in May 2024 before starting to ease.
The central bank’s next rate-setting meeting is scheduled for July 23.